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Has the Wage Phillips Curve Gone Dormant?

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Although the labor market has steadily strengthened, wage growth has remained slow in recent years. This raises the question of whether the wage Phillips curve—the traditional relationship between labor market slack and wage growth—has weakened. Estimating a causal link from slack to wage growth using national data is difficult. However, using city-level data over the past 25 years shows that the cross-city relationship has weakened since the Great Recession. Explanations consistent with this timing suggest that the Phillips curve may return to a steeper curve in the future.

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  • Leduc, Sylvain & Wilson, Daniel J., 2017. "Has the Wage Phillips Curve Gone Dormant?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfel:00145
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    1. Greg Kaplan & Sam Schulhofer‐Wohl, 2017. "Understanding The Long‐Run Decline In Interstate Migration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58, pages 57-94, February.
    2. David Autor & David Dorn & Lawrence F. Katz & Christina Patterson & John Van Reenen, 2017. "Concentrating on the Fall of the Labor Share," American Economic Review, American Economic Association, vol. 107(5), pages 180-185, May.
    3. Fitzgerald, Terry J. & Nicolini, Juan Pablo, 2014. "Is There a Stable Relationship between Unemployment and Future Inflation? Evidence from U.S. Cities," Working Papers 713, Federal Reserve Bank of Minneapolis.
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    Cited by:

    1. Renaud St-Cyr, 2018. "Non-linéarité de la courbe de Phillips : un survol de la littérature," Staff Analytical Notes 2018-3, Bank of Canada.
    2. Gilles Dufrénot & Meryem Rhouzlane & Etienne Vaccaro-Grange, 2019. "Potential Growth and Natural Yield Curve in Japan," Working Papers halshs-02091035, HAL.
    3. Benjamin Garcia & Arsenios Skaperdas, "undated". "Inferring the Shadow Rate from Real Activity," Finance and Economics Discussion Series 2017-106, Board of Governors of the Federal Reserve System (US).

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