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An Introduction to the Wage Curve

  • David G. Blanchflower
  • Andrew J. Oswald

This paper documents a statistical regulatity or law. It shows that there exists a downward-sloping curve linking the level of a worker's pay to the unemployment rate in the worker's region. The same curve can be found in microeconomic data sets from sixteen countries. The existence of this curve raises doubts about conventional wisdom in labor economics, regional economics, and macroeconomics.

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Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 9 (1995)
Issue (Month): 3 (Summer)
Pages: 153-167

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Handle: RePEc:aea:jecper:v:9:y:1995:i:3:p:153-67
Note: DOI: 10.1257/jep.9.3.153
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  1. Michael Woodford, 1994. "Structural Slumps," Journal of Economic Literature, American Economic Association, vol. 32(4), pages 1784-1815, December.
  2. Blanchflower, D. & Oswald, A., 1989. "The Wage Curve," Papers 340, London School of Economics - Centre for Labour Economics.
  3. Bruce Greenwald & Joseph E. Stiglitz, 1993. "New and Old Keynesians," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 23-44, Winter.
  4. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  5. Card, David, 1990. "Unexpected Inflation, Real Wages, and Employment Determination in Union Contracts," American Economic Review, American Economic Association, vol. 80(4), pages 669-88, September.
  6. Holmlund, B. & Skedinger, P., 1988. "Wage Bargaining And Wage Drift: Evidence From The Swedish Wood Industry," Papers 419, Stockholm - International Economic Studies.
  7. Blackaby, D H & Manning, D N, 1990. "The North-South Divide: Questions of Existence and Stability?," Economic Journal, Royal Economic Society, vol. 100(401), pages 510-27, June.
  8. Blackaby, D H & Manning, D N, 1987. "Regional Earnings Revisited," The Manchester School of Economic & Social Studies, University of Manchester, vol. 55(2), pages 158-83, June.
  9. Rowthorn, R E, 1977. "Conflict, Inflation and Money," Cambridge Journal of Economics, Oxford University Press, vol. 1(3), pages 215-39, September.
  10. Phelps, Edmund S, 1992. "Consumer Demand and Equilibrium Unemployment in a Working Model of the Customer-Market Incentive-Wage Economy," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 1003-32, August.
  11. Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
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