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International Wage Curves

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  • David G. Blanchflower
  • Andrew J. Oswald

Abstract

The paper provides evidence for the existence of a negatively sloped locus linking the level of pay to the rate of regional (or industry) unemployment. This "wage curve" is estimated using microeconomic data for Britain, the US, Canada, Korea, Austria, Italy, Holland, Switzerland, Norway, and Germany, The average unemployment elasticity of pay is approximately -0.1. The paper sets out a multi-region efficiency wage model and argues that its predictions are consistent with the data.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4200.

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Date of creation: Oct 1992
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Publication status: published as Differences and Changes in Wage Structures, ed. Katz and Freeman, University of Chicago Press, 1995
Handle: RePEc:nbr:nberwo:4200

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  1. Marston, Stephen T, 1985. "Two Views of the Geographic Distribution of Unemployment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 100(1), pages 57-79, February.
  2. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, Elsevier, vol. 32(3), pages 385-397, August.
  3. Nickell, Stephen & Wadhwani, Sushil B, 1989. "Insider Forces and Wage Determination," CEPR Discussion Papers, C.E.P.R. Discussion Papers 310, C.E.P.R. Discussion Papers.
  4. Lawrence Katz & Alan Krueger, 1991. "The Effect of the New Minimum Wage Law in a Low-Wage Labor Market," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 660, Princeton University, Department of Economics, Industrial Relations Section..
  5. Layard, Richard & Nickell, Stephen, 1986. "Unemployment in Britain," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 53(210(S)), pages S121-69, Supplemen.
  6. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
  7. Adams, James D, 1985. "Permanent Differences in Unemployment and Permanent Wage Differentials," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 100(1), pages 29-56, February.
  8. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, American Economic Association, vol. 60(1), pages 126-42, March.
  9. David G. Blanchflower & Lisa M. Lynch, 1994. "Training at Work: A Comparison of U.S. and British Youths," NBER Chapters, National Bureau of Economic Research, Inc, in: Training and the Private Sector, pages 233-260 National Bureau of Economic Research, Inc.
  10. Blanchflower, D., 1989. "Fear, Unemployment And Pay Flexibility," Papers, London School of Economics - Centre for Labour Economics 344, London School of Economics - Centre for Labour Economics.
  11. Edin, P.A. & Holmlund, B. & Ostros, T., 1992. "Wage Behavior and Labor Market Programs in Sweden: Evidence from Micro Data," Papers, Uppsala - Working Paper Series 1993-1, Uppsala - Working Paper Series.
  12. Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(2), pages 255-83, May.
  13. Blackaby, D H & Manning, D N, 1987. "Regional Earnings Revisited," The Manchester School of Economic & Social Studies, University of Manchester, University of Manchester, vol. 55(2), pages 158-83, June.
  14. Phelps, Edmund S, 1990. " Effects of Productivity, Total Domestic-Product Demand and "Incentive Wages" on Unemployment in a Non-monetary Customer-Market Model of the Small Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 92(2), pages 353-67.
  15. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, American Economic Association, vol. 74(3), pages 433-44, June.
  16. Reza, Ali M, 1978. "Geographical Differences in Earnings and Unemployment Rates," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 201-08, May.
  17. Richard Jackman & Richard Layard & S Savouri, 1990. "Mismatch: A Framework for Thought," CEP Discussion Papers, Centre for Economic Performance, LSE dp0001, Centre for Economic Performance, LSE.
  18. Kloek, T, 1981. "OLS Estimation in a Model Where a Microvariable Is Explained by Aggregates and Contemporaneous Disturbances Are Equicorrelated," Econometrica, Econometric Society, Econometric Society, vol. 49(1), pages 205-07, January.
  19. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(3), pages S111-43, June.
  20. Beaudry, Paul & DiNardo, John, 1991. "The Effect of Implicit Contracts on the Movement of Wages over the Business Cycle: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(4), pages 665-88, August.
  21. Christofides, Louis N & Oswald, Andrew J, 1992. "Real Wage Determination and Rent-Sharing in Collective Bargaining Agreements," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(3), pages 985-1002, August.
  22. Richard B. Freeman, 1990. "Employment and Earnings of Disadvantaged Young Men in a Labor Shortage Economy," NBER Working Papers 3444, National Bureau of Economic Research, Inc.
  23. Greenwald, Bruce C., 1983. "A general analysis of bias in the estimated standard errors of least squares coefficients," Journal of Econometrics, Elsevier, Elsevier, vol. 22(3), pages 323-338, August.
  24. repec:fth:prinin:280 is not listed on IDEAS
  25. Holmlund, Bertil & Zetterberg, Johnny, 1991. "Insider effects in wage determination : Evidence from five countries," European Economic Review, Elsevier, Elsevier, vol. 35(5), pages 1009-1034, July.
  26. Bils, Mark J, 1985. "Real Wages over the Business Cycle: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(4), pages 666-89, August.
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