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The Wage Phillips Curve under Labor Market Power

Author

Listed:
  • Anastasia Burya
  • Rui Mano
  • Yannick Timmer
  • Anke Weber

Abstract

Using the near universe of online vacancy postings in the United States, we explore linkages between labor market power and the trade-off between unemployment and wages. We estimate the Phillips curve at the commuting zone level and find that the relationship between unemployment and wage inflation is weak in regions with high labor market power. These results help explain the flattening of the wage Phillips curve following the global financial crisis. In the context of rising interest rates, unemployment is likely to rise more in poorer US regions because labor market power is more prevalent there, thus leading to rising inequality.

Suggested Citation

  • Anastasia Burya & Rui Mano & Yannick Timmer & Anke Weber, 2023. "The Wage Phillips Curve under Labor Market Power," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 110-113, May.
    • Handle: RePEc:aea:apandp:v:113:y:2023:p:110-13
    DOI: 10.1257/pandp.20231007
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    References listed on IDEAS

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    7. Anastasia Burya & Rui Mano & Mr. Yannick Timmer & Miss Anke Weber, 2022. "Monetary Policy Under Labor Market Power," IMF Working Papers 2022/128, International Monetary Fund.
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    Cited by:

    1. Brzozowski, Michał & Siwińska-Gorzelak, Joanna, 2024. "Did robots make wages less responsive to unemployment?," Technological Forecasting and Social Change, Elsevier, vol. 209(C).

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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