The wage curve revisited: Estimates from a UK panel

Johnes, Geraint

doi:10.1016/j.econlet.2006.08.029

Cited by 8 publications

(7 citation statements)

References 25 publications

(16 reference statements)

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“…Although not statistically significant, these results are broadly in line with previous studies investigating wage curves for Britain (e.g. Blanchflower and Oswald, 1994a;Black and FitzRoy, 2000;Bell et al, 2002;Johnes, 2007). given the classification chosen.…”

Section: The 'Traditional' Wage Curvesupporting

confidence: 81%

Job Competition and the Wage Curve

Longhi

2012

Regional Studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACTThe 'wage curve' literature consistently finds a negative relationship between regional unemployment rates and regional wages; the most widely accepted explanations are efficiency wage and labour turnover costs theories in which the unemployment rate is a measure of job competition. Since it fails to correctly measure labour supply and demand, however, the unemployment rate is likely to be an imprecise measure of job competition. This paper estimates wage curves using different measures of job competition. The results suggest that efficiency wage and labour turnover costs theories do not seem to offer satisfactory explanations of the wage curve phenomenon. NON-TECHNICAL SUMMARYA large empirical literature estimates the relationship between the local unemployment rate and local wages, the so-called 'wage curve'. This literature, mostly initiated with the book by Blanchflower and Oswald (1994), generally finds that a doubling of the unemployment rate is associated to a roughly ten percent decrease in wages.Despite the large empirical evidence on the existence of such a negative relationship between unemployment and wages, there is still lack of theoretical models explaining the wage curve phenomenon. One of the fundamental hypotheses of the theoretical explanations of the wage curve is that the local unemployment is a measure of job competition, of how difficult it is for workers to find a (new) job if they quit or are fired. Nevertheless, there are various reasons why the local unemployment rate is likely to be an imprecise measure of job competition. First, it assumes that workers with different levels of education and experience are close substitutes; second it neglects the possibility that a number of workers might hold a temporary job or might be dissatisfied with their current job, and might therefore engage in on-the-job search. This paper uses data from the UK Labour Force Survey (LFS) over the period 1997-2005 to test whether the negative relationship between local wages and the measure of job competition is robust to changes in the way job competition is measured. Measures based only on the regional unemployment rate are compared to more complete measures accounting for on-the-job search, changes in labour demand, as well as accessibility of the local labour market. The results are clearly supportive of a wage curve only when job competition is measured by the unemployment rate. When job competition is measure...

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Section: The 'Traditional' Wage Curvesupporting

confidence: 81%

Job Competition and the Wage Curve

Longhi

2012

Regional Studies

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“…Moreover, this variable can capture the effects of different productive structures in each region, which probably are insufficiently controlled for by industry sector and occupational dummies. The relative advantages of panel data to crosssectional analysis has been highlighted by Bratsberg and Turunen (1996) and, more recently, by Johnes (2007) in the context of the wage curve literature.…”

Section: Econometric Methodologymentioning

confidence: 99%

Is the wage curve formal or informal? Evidence for Colombia

2010

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Abstract:The objective of this paper is to analyse the existence or not of a wage curve in Colombia, paying special attention to the differences between formal and informal workers, an issue that has been systematically ignored in the wage curve literature.The obtained results using microdata from the Colombian Continuous Household Survey (CHS) between 2002 and 2006 show the existence of a wage curve with a negative slope for the Colombian economy. Using information on metropolitan areas, the estimates of the elasticity of individual wages to local unemployment rates was -0.07, a value that is very close to those obtained for other countries. However, the disaggregation of statistical information for formal and informal workers has shown significant differences among both groups of workers. In particular, for the less protected groups of the labour market, informal workers (both men and women), a high negatively sloped wage curve was found. This result is consistent with the conclusions from efficiency wage theoretical models and should be taken into account when analysing the functioning of regional labour markets in developing countries.

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“…Studies on the wage curve find the wage curve to be stable around an unemployment elasticity of the wage about −0.1 [32]. However, wage elasticity might differ across regions, as shown in a study conducted by Montuenga et al [33] on five EU countries using information provided by a homogeneous panel data set-the European Community Household Panel on France, Italy, Portugal, Spain, and the UK for the period 1994-96.…”

Section: Literature Reviewmentioning

confidence: 98%

“…Some studies even fail to find a clear negative relationship between wages and unemployment. Pannenberg and Schwarze [35] conducted a study on East Germany for a period from 1992 to 1994 and reported a result that there is no significantly negative relationship between regional wages and regional unemployment for East Germany while Johnes [32] ended up with an unemployment elasticity of the wage for the UK (for a period from 1992 to 2003) that is both volatile and imprecisely determined and a shape that "does not generally accord with any general empirical law" [32, p. 419].…”

Section: Literature Reviewmentioning

confidence: 99%

Phillips and Wage Curves: Empirical Evidence from Bosnia and Herzegovina

Omerčević¹,

Nuroğlu

2014

Economics Research International

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This study is an empirical examination of the existence and characteristics of the Phillips curve and the wage curve in Bosnia and Herzegovina. The findings indicate that there is no evidence of the existence of the short-term Phillips curve. Instead, the data suggests that in the short-term an increase in inflation leads to an increase in unemployment. The estimated wage curves indicate that only increases in real payment increase employment. The conclusion of this study is that increases in inflation might have a negative short-term impact on the level of employment in Bosnia and Herzegovina.

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The wage curve revisited: Estimates from a UK panel

Cited by 8 publications

References 25 publications

Job Competition and the Wage Curve

Job Competition and the Wage Curve

Is the wage curve formal or informal? Evidence for Colombia

Phillips and Wage Curves: Empirical Evidence from Bosnia and Herzegovina

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