IDEAS home Printed from https://ideas.repec.org/p/ioe/doctra/235.html
   My bibliography  Save this paper

Wages and Unemployment in the United States: Reviving a Wage Gap Explanation

Author

Listed:
  • Sebastián Claro

    () (Instituto de Economía. Pontificia Universidad Católica de Chile.)

Abstract

The unemployment path in the United States in the last forty years can be significantly explained by the evolution of excessive real wages. An estimation of the evolution of market-clearing wages is presented and its difference with observed average wages - the wage gap - is shown to track significantly the path of the unemployment rate. Aside from emphasizing unemployment as an involuntary phenomenon, the neoclassical nature of the labor demand function used casts doubts with respect to effectiveness of aggregate demand policies, contrasting with some natural rate theories whose labor demand side provides room for extensive demand shocks. In this context, a fall in real wages appears as the key mechanism to generate a rise in aggregate employment.

Suggested Citation

  • Sebastián Claro, 2003. "Wages and Unemployment in the United States: Reviving a Wage Gap Explanation," Documentos de Trabajo 235, Instituto de Economia. Pontificia Universidad Católica de Chile..
  • Handle: RePEc:ioe:doctra:235
    as

    Download full text from publisher

    File URL: http://www.economia.uc.cl/docs/dt_235.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Barry Bosworth & George L. Perry, 1994. "Productivity and Real Wages: Is There a Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 317-343.
    2. Bean, Charles R, 1994. "European Unemployment: A Survey," Journal of Economic Literature, American Economic Association, vol. 32(2), pages 573-619, June.
    3. Gordon, Robert J, 1995. "Is There a Trade-off between Unemployment and Productivity Growth?," CEPR Discussion Papers 1159, C.E.P.R. Discussion Papers.
    4. Sebastián Claro, 2002. "Manufacturing Employment Cycle," Documentos de Trabajo 212, Instituto de Economia. Pontificia Universidad Católica de Chile..
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sebastián Claro, 2002. "Manufacturing Employment Cycle," Documentos de Trabajo 212, Instituto de Economia. Pontificia Universidad Católica de Chile..

    More about this item

    Keywords

    Unemployment; wage gap; labor demand;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ioe:doctra:235. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jaime Casassus). General contact details of provider: http://edirc.repec.org/data/iepuccl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.