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Reworking the Wage Curve: Exploring the consistency of the model across time, space and demographic group

  • Heather Boushey

This paper extends Blanchflower & Oswald's (1994) work on the wage curve to the 50 largest metropolitan areas in the United States. The wage curve is more elastic in US metropolitan areas than prior research shows for the nation as a whole, and the wage curve varies over the business cycle, becoming more elastic in periods of higher unemployment. The most striking finding is that black workers have a more elastic wage curve than do white workers. Estimating the wage curve with the non-employment rate, a measure of underemployment, shows elasticities that are substantially higher than for wage curves estimated with the unemployment rate. This trend further increases the negative effects on pay for blacks, who are more likely than white workers to be underemployed.

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Article provided by Taylor & Francis Journals in its journal Review of Political Economy.

Volume (Year): 14 (2002)
Issue (Month): 3 ()
Pages: 293-311

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Handle: RePEc:taf:revpoe:v:14:y:2002:i:3:p:293-311
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  1. Charles T. Carlstrom & Christy D. Rollow, 1998. "Regional variations in white-black earnings," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 10-22.
  2. H. J. Holzer & M. A. Stoll, . "Employer Demand for Welfare Recipients by Race," Institute for Research on Poverty Discussion Papers 1213-00, University of Wisconsin Institute for Research on Poverty.
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  6. Richard B. Freeman, 1990. "Employment and Earnings of Disadvantaged Young Men in a Labor Shortage Economy," NBER Working Papers 3444, National Bureau of Economic Research, Inc.
  7. Murphy, Kevin M & Topel, Robert H, 1997. "Unemployment and Nonemployment," American Economic Review, American Economic Association, vol. 87(2), pages 295-300, May.
  8. Groot Wim & Mekkelholt Eddie & Oosterbeek, Hessel, 1992. "Further evidence on the wage curve," Economics Letters, Elsevier, vol. 38(3), pages 355-359, March.
  9. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, June.
  10. David Card, 1995. "The Wage Curve: A Review," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 285-299, June.
  11. James Tobin, 1993. "Poverty in Relation to Macroeconomic Trends, Cycles, and Policies," Cowles Foundation Discussion Papers 1030R, Cowles Foundation for Research in Economics, Yale University.
  12. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
  13. Bratsberg, Bernt & Turunen, Jarkko, 1996. "Wage curve evidence from panel data," Economics Letters, Elsevier, vol. 51(3), pages 345-353, June.
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