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Fear, Unemployment and Pay Flexibility

Listed author(s):
  • Blanchflower, David G

The paper uses newly available cross-section data to study wage determination in the United Kingdom in the 1980s. The main results are as follows: (1) fear of unemployment substantially depresses pay; (2) there is some evidence of a wage ratchet whereby rates of pay are more flexible upwards than downwards; (3) the unemployment elasticity of pay averages -0.1; and (4) wages are much more flexible in nonunion workplaces than they are in union workplaces. Copyright 1991 by Royal Economic Society.

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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 101 (1991)
Issue (Month): 406 (May)
Pages: 483-496

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Handle: RePEc:ecj:econjl:v:101:y:1991:i:406:p:483-96
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  1. Lindbeck, Assar & Snower, Dennis J, 1988. "Cooperation, Harassment, and Involuntary Unemployment: An Insider-Outsider Approach," American Economic Review, American Economic Association, vol. 78(1), pages 167-188, March.
  2. Willis, Robert J., 1987. "Wage determinants: A survey and reinterpretation of human capital earnings functions," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 10, pages 525-602 Elsevier.
  3. Wachtel, Howard M & Betsey, Charles, 1972. "Employment at Low Wages," The Review of Economics and Statistics, MIT Press, vol. 54(2), pages 121-129, May.
  4. Solow, Robert M, 1985. " Insiders and Outsiders in Wage Determination," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 411-428.
  5. Holzer, Harry J & Montgomery, Edward B, 1993. "Asymmetries and Rigidities in Wage Adjustments by Firms," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 397-408, August.
  6. Pencavel, John, 1985. " Wages and Employment under Trade Unionism: Microeconomic Models and Macroeconomic Applications," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 197-225.
  7. Greenhalgh, Christine A, 1980. "Male-Female Wage Differentials in Great Britain: Is Marriage an Equal Opportunity?," Economic Journal, Royal Economic Society, vol. 90(363), pages 751-775, December.
  8. Louis N. Christofides & Andrew J. Oswald, 1989. "Real Wage Determinatioan in Collective BArgaining Agreements," NBER Working Papers 3188, National Bureau of Economic Research, Inc.
  9. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," Working papers 427, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Gottfries, Nils & Horn, Henrik, 1987. "Wage Formation and the Persistence of Unemployment," Economic Journal, Royal Economic Society, vol. 97(388), pages 877-884, December.
  11. Minford, Patrick, 1983. "Labour Market Equilibrium in an Open Economy," Oxford Economic Papers, Oxford University Press, vol. 35(0), pages 207-244, Supplemen.
  12. Chowdhury, Gopa & Nickell, Stephen, 1985. "Hourly Earnings in the United States: Another Look at Unionization, Schooling, Sickness, and Unemployment Using PSID Data," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 38-69, January.
  13. Blanchflower, D. & Oswald, A., 1989. "Wages And House Prices: Cross-Section Evidence," Papers 345, London School of Economics - Centre for Labour Economics.
  14. Black, Jane M & Bulkley, I George, 1989. "Do Trade Unions Reduce Job Opportunities of Non-members?," Economic Journal, Royal Economic Society, vol. 99(394), pages 177-186, March.
  15. Begg, David & Lindbeck, Assar & Martin, Chris & Snower, Dennis, 1989. "Symmetric and asymmetric persistence of labor market shocks," Journal of the Japanese and International Economies, Elsevier, vol. 3(4), pages 554-577, December.
  16. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
  17. Alan B. Krueger & Lawrence H. Summers, 1986. "Reflections on the Inter-Industry Wage Structure," NBER Working Papers 1968, National Bureau of Economic Research, Inc.
  18. Layard, Richard & Nickell, Stephen, 1986. "Unemployment in Britain," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages 121-169, Supplemen.
  19. Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-239, May.
  20. Bils, Mark J, 1985. "Real Wages over the Business Cycle: Evidence from Panel Data," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 666-689, August.
  21. Ian M. McDonald & Robert M. Solow, 1985. "Wages and Employment in a Segmented Labor Market," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1115-1141.
  22. William T. Dickens & Lawrence F. Katz, 1986. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc.
  23. Blackaby, D H & Manning, D N, 1987. "Regional Earnings Revisited," The Manchester School of Economic & Social Studies, University of Manchester, vol. 55(2), pages 158-183, June.
  24. Carruth, Alan A & Oswald, Andrew J, 1987. "On Union Preferences and Labour Market Models: Insiders and Outsi ders," Economic Journal, Royal Economic Society, vol. 97(386), pages 431-445, June.
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