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Fear, Unemployment and Pay Flexibility

  • David G. Blanchflower

The paper uses newly available cross-section data to study wage determination in the United Kingdom in the 1980s. The results are contrasted with those from a comparable sample from the US from 1977-1988. 1) Fear of unemployment substantially depresses pay in both countries. 2) There is some evidence of a wage ratchet in the UK whereby rates of pay are more flexible upwards than downwards. 3) The unemployment elasticity of pay averages -0.1 in the UK and apparently zero in the US. 4) Wages are almost twice as flexible in non-union and small workplaces in the UK.

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File URL: http://www.nber.org/papers/w3365.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3365.

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Date of creation: May 1990
Date of revision:
Publication status: published as The Economic Journal, Vol. 101, No. 406, pp.483-496, (May 1991).
Handle: RePEc:nbr:nberwo:3365
Note: LS
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  19. Chowdhury, Gopa & Nickell, Stephen, 1985. "Hourly Earnings in the United States: Another Look at Unionization, Schooling, Sickness, and Unemployment Using PSID Data," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 38-69, January.
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