Real Wages, Employment, and the Phillips Curve
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.
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