Cliometrie du modèle WS-PS en France
AbstractFrom a macroeconomic perspective and in accordance with the Wage Setting – Price Setting model (WS- PS, Layard - Nickel - Jackman (1991)), this paper aims to give a simple and simultaneous representation of the dynamics of the unemployment rate and the wage rate in France over the period of 1950-2008. Distinguishing the price level at which employees refer and the price set by employers, and subject to complementary assumptions about factors supposed but not specified in the WS-PS system, we show that the equilibrium rate of unemployment is made of a chronic component due to an excess of the real labor cost comparing to productivity, by a conjunctural component characterized by the output gap (as like the Okun law) and by a structural component including voluntary, frictional and technological factors, represented by a stochastic state variable. The social cost of unemployment implies that the observed rate of unemployment adjusts gradually towards its equilibrium value, the latter depending on the time varying degree of rigidity of employment. The rate of wage equation is supposed given by a weighted average of the WS and PS equations. As a result, the wage rate depends on the levels of price and productivity, of the margin of companies and of the rate of unemployment rate. At the empirical level, estimations are made simultaneously for the unemployment and wages with a space-state model based on the Kalman filter method allowing for the introduction of time varying coefficients characterizing the degree of rigidity of employment. In accordance with this framework, we found that the rate of unemployment tends to adjust gradually to its equilibrium level within 2.7 years and that the degree of rigidity is a time varying phenomenon. The estimated components of the equilibrium unemployment rate indicate that the chronic component is negative until 1974, hence compensating the other components and allowing to understanding the very low values (under 2%) of the unemployment rate observed during these years. After 1974, the chronic component increases to get a maximum of 6.7% in 1993, then decreasing to reach about 4% in 2008. The conjunctural component exhibits numerous minima and maxima from zero in 1973 to 4% in 1993, to reach about 2% in 2008. As expected, the structural component is smoother than the two others and ranges between 0.5% and 4% and reach about 2% in 2008. As expected, t he dynamics of wages depend of a weighted average consumer and wholesale prices and of the productivity with elasticities near unity, on the margin of companies and on the rate of unemployment with a sensibility which is time varying, depending on the relative importance attributed by employees and employers to unemployment during the negotiations. Our outcomes also suggest that the bargaining powers of employees and employers are rather balanced in the average over the whole period.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Research, Ipag Business School in its series Working Papers with number 8.
Length: 47 pages
Date of creation: 08 May 2013
Date of revision:
Other versions of this item:
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert Boyer, 1978. "Les salaires en longue période," Économie et Statistique, Programme National Persée, vol. 103(1), pages 27-57.
- Stuart E. Weiner, 1993. "New estimates of the natural rate of unemployment," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 53-69.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ingmar Schumacher).
If references are entirely missing, you can add them using this form.