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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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    1. Azar, José & Marinescu, Ioana & Steinbaum, Marshall & Taska, Bledi, 2020. "Concentration in US labor markets: Evidence from online vacancy data," Labour Economics, Elsevier, vol. 66(C).
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    3. Brad Hershbein & Lisa B. Kahn, 2018. "Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings," American Economic Review, American Economic Association, vol. 108(7), pages 1737-1772, July.
    4. Gregor Jarosch & Jan Sebastian Nimczik & Isaac Sorkin, 2024. "Granular Search, Market Structure, and Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(6), pages 3569-3607.
    5. Jonathon Hazell & Juan Herreno & Emi Nakamura & Jon Steinsson, 2021. "The Slope of the Phillips Curve: Evidence from U.S. States," Working Papers 284, Princeton University, Department of Economics, Center for Economic Policy Studies..
    6. 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.
    7. Jonathon Hazell & Juan Herreño & Emi Nakamura & Jón Steinsson, 2022. "The Slope of the Phillips Curve: Evidence from U.S. States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1299-1344.
    8. Alan Manning, 2006. "A Generalised Model of Monopsony," Economic Journal, Royal Economic Society, vol. 116(508), pages 84-100, January.
    9. Jordi Galí & Luca Gambetti, 2019. "Has the U.S. Wage Phillips Curve Flattened? A Semi-Structural Exploration," Working Papers Central Bank of Chile 846, Central Bank of Chile.
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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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