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Real Wages, Employment, and the Phillips Curve

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  • Sumner, Scott
  • Silver, Stephen

Abstract

A recent study by Mark J. Bils (1985) found real wages to be procyclical, contradicting previous findings by Patrick T. Geary and John Kennan (1982), who found no consistent relationship, and Salih N. Neftci (1978), who found countercyclical movements in real wages. These studies differed in both methodology and sample period. In this study, the authors find that real wages are either procyclical or countercyclical depending on the sample period chosen. Employment changes generated by aggregate supply shocks are associated with procyclical real wage movements, while during years dominated by shifts in aggregate demand, real wages are highly countercyclical. Copyright 1989 by University of Chicago Press.

Suggested Citation

  • Sumner, Scott & Silver, Stephen, 1989. "Real Wages, Employment, and the Phillips Curve," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 706-720, June.
  • Handle: RePEc:ucp:jpolec:v:97:y:1989:i:3:p:706-20
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    Cited by:

    1. Cervini-Plá, María & Silva, José I. & López-Villavicencio, Antonia, 2012. "Labor disruption costs and real wages cyclicality," MPRA Paper 42366, University Library of Munich, Germany.
    2. Anne-Gisèle Privat, 2005. "L'avenir des retraites en France: Evalutation de l'impact des réformes de 1993 et de 2033 à l'aide du modèle de microsimulation Artémis," Sciences Po publications info:hdl:2441/f4rshpf3v1u, Sciences Po.
    3. Martin Schmidt, 2003. "The relative adjustment of wages and prices: direct tests within a multiple-equation system," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 985-997.
    4. Safarzyńska, Karolina & van den Bergh, Jeroen C.J.M., 2017. "Integrated crisis-energy policy: Macro-evolutionary modelling of technology, finance and energy interactions," Technological Forecasting and Social Change, Elsevier, vol. 114(C), pages 119-137.
    5. repec:eee:macchp:v2-297 is not listed on IDEAS
    6. Kandil, Magda, 2007. "The wage-price spiral: International evidence and implications," Journal of Economics and Business, Elsevier, vol. 59(3), pages 212-240.
    7. Ghosal, Vivek, 2000. "Product market competition and the industry price-cost markup fluctuations:: role of energy price and monetary changes," International Journal of Industrial Organization, Elsevier, vol. 18(3), pages 415-444, April.
    8. Erica L. Groshen & Mark E. Schweitzer, 1996. "Macro- and microeconomic consequences of wage rigidity," Working Paper 9607, Federal Reserve Bank of Cleveland.
    9. Grace Weishi Gu & Eswar Prasad, 2018. "New Evidence on Cyclical Variation in Labor Costs in the U.S," NBER Working Papers 24266, National Bureau of Economic Research, Inc.
    10. Bryan Perry & Kerk Phillips & David E. Spencer, 2015. "Real wages and monetary policy: a DSGE approach," Journal of Economic Studies, Emerald Group Publishing, vol. 42(5), pages 734-752, October.
    11. Bryan Perry & Kerk L Phillips & David E. Spencer, 2015. "State-Level Variation in the Real Wage Response to Monetary Policy," Annals of Economics and Finance, Society for AEF, vol. 16(1), pages 1-17, May.
    12. Ulrich Woitek, 2004. "Real Wages and Business Cycle Asymmetries," CESifo Working Paper Series 1206, CESifo Group Munich.
    13. Marczak, Martyna & Gómez, Víctor, 2015. "Cyclicality of real wages in the USA and Germany: New insights from wavelet analysis," Economic Modelling, Elsevier, vol. 47(C), pages 40-52.
    14. S. Rao Aiyagari, 1995. "Comments on Farmer and Guo's "the econometrics of indeterminacy: an applied study."," Staff Report 196, Federal Reserve Bank of Minneapolis.
    15. Nicholas Apergis & Alexandros Panethimitakis, 2011. "Stylised facts of Greek business cycles: new evidence from aggregate and across regimes data," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 3(2), pages 147-165.
    16. Magda Kandil, 2010. "Demand shocks and the cyclical behavior of the real wage: Some international evidence," Journal of Applied Economics, Universidad del CEMA, vol. 13, pages 135-158, May.
    17. Naci Mocan, 2008. "What Determines Corruption? International Evidence From Microdata," Economic Inquiry, Western Economic Association International, vol. 46(4), pages 493-510, October.
    18. Dibooglu, Selahattin & Enders, Walter, 2001. "Do Real Wages Respond Asymmetrically to Unemployment Shocks? Evidence from the U.S. and Canada," Journal of Macroeconomics, Elsevier, vol. 23(4), pages 495-515, October.
    19. Charles A. Fleischman, 1999. "The causes of business cycles and the cyclicality of real wages," Finance and Economics Discussion Series 1999-53, Board of Governors of the Federal Reserve System (U.S.).
    20. Anabela Carneiro & Pedro Portugal, 2004. "Workers' Flows and Real Wage Cyclicality," Working Papers w200409, Banco de Portugal, Economics and Research Department.
    21. Sharon J. Erenburg, "undated". "Linking Public Capital to Economic Performance, Public Capital: The Missing Link Between Investment and Economic Growth ," Economics Public Policy Brief Archive 14, Levy Economics Institute.
    22. Sharon J. Erenburg, 1993. "Productivity, Private and Public Capital, and Real Wage in the United States, 1948-1990," Economics Working Paper Archive wp_94, Levy Economics Institute.
    23. repec:spo:wpecon:info:hdl:2441/f4rshpf3v1umfa09lat214kj4 is not listed on IDEAS

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