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Phillips Curve or wage curve? : evidence from West Germany: 1980-2004

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Author Info

  • Baltagi, Badi H.
  • Blien, Uwe

    ()
    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Wolf, Katja

    ()
    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

Abstract

"This paper reconsiders the West German wage curve using the employment statistics of the Federal Employment Services of Germany (Bundesanstalt für Arbeit) over the period 1980-2004. This updates the earlier study by Baltagi and Blien (1998) by 15 years for a more disaggregated 326 regions of West Germany. It is based on a random sample of 417,426 individuals drawn from the population of employees whose establishments are required to report to the social insurance system. We find that the wage equation is highly autoregressive but far from unit root. This means that this wage equation is not a pure Phillips curve, nor a static wage curve, and one should account for wage dynamics. This in turn leads to a smaller but significant unemployment elasticity of -0.02 up to -0.03 rather than the -0.07 reported in the static wage curve results reported by Baltagi and Blien (1998)." (Author's abstract, IAB-Doku) ((en))

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Bibliographic Info

Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 200714.

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Length: 22 pages
Date of creation: 02 Apr 2007
Date of revision:
Handle: RePEc:iab:iabdpa:200714

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Keywords: Arbeitslosenquote; Lohnhöhe; regionaler Arbeitsmarkt; Lohnkurve; IAB-Beschäftigtenstichprobe; Phillipskurve; Westdeutschland; Bundesrepublik Deutschland;

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References

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  1. Víctor M. Montuenga-Gómez & José M. Ramos-Parreño, 2005. "Reconciling the Wage Curve and the Phillips Curve," Journal of Economic Surveys, Wiley Blackwell, vol. 19(5), pages 735-765, December.
  2. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345, September.
  3. Peter Nijkamp & Jacques Poot, 2002. "The Last Word on the Wage Curve?," Tinbergen Institute Discussion Papers 02-029/3, Tinbergen Institute, revised 13 Mar 2003.
  4. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
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Cited by:
  1. Stefanie Schurer, 2008. "Labour Market Outcomes of Second Generation Immigrants: How Heterogeneous Are They Really?," Melbourne Institute Working Paper Series wp2008n14, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  2. Martinoia, Michela, 2009. "European integration, labour market dynamics and migration flows," POLIS Working Papers 136, Institute of Public Policy and Public Choice - POLIS.
  3. Herbert Brücker & Elke J. Jahn, 2011. "Migration and Wage‐setting: Reassessing the Labor Market Effects of Migration," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113, pages 286-317, 06.
  4. Björn Alecke & Timo Mitze & Gerhard Untiedt, 2009. "Internal Migration, Regional Labour Market Dynamics and Implications for German East-West Disparities – Results from a Panel VAR," Ruhr Economic Papers 0096, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Uwe Blien & Hermann Gartner & Heiko Stüber & Katja Wolf, 2009. "Regional price levels and the agglomeration wage differential in western Germany," The Annals of Regional Science, Springer, vol. 43(1), pages 71-88, March.
  6. Mitze, Timo & Reinkowski, Janina, 2010. "Testing the Validity of the Neoclassical Migration Model: Overall and Age-Group Specific Estimation Results for German Spatial Planning Regions," MPRA Paper 23616, University Library of Munich, Germany.
  7. Hans-Friedrich Eckey & Reinhold Kosfeld & Alexander Werner, 2008. "Die Lohnkurve in Deutschland unter Berücksichtigung des regionalen Preisniveaus," MAGKS Papers on Economics 200810, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  8. Ludsteck, Johannes, 2008. "Wage cyclicality and the wage curve under the microscope," IAB Discussion Paper 200811, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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