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The wage curve and the Phillips curve (1997)
| Venue: | Finance and Economics Discussion Paper Series # 57, Federal Reserve Board of Governors |
| Citations: | 7 - 0 self |
BibTeX
@INPROCEEDINGS{Roberts97thewage,
author = {John M. Roberts},
title = {The wage curve and the Phillips curve},
booktitle = {Finance and Economics Discussion Paper Series # 57, Federal Reserve Board of Governors},
year = {1997}
}
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Abstract
level of unemployment is related to the fevel of wages. This result is at variance with an application of the original Phillips curve to regional data, which would predict that the change in wages ought to be related to the unemployment rate. On the other hand, there is considerable empirical support for the expectations-augmented Phillips curve using macroeconomic data. I resolve this tension by showing that a standard macroeconomic expectations-augmented Phillips curve can be derived from microfoundations that begin with the wage curve. I am grateful to Kevin Hassett, David Lebow, and Andrew Oswald for helpful comments. The views expressed in this paper are those of the author and not necessarily those of the Board of Governors of the Federal Reserve System or other members of its staff. In their book The Wage Curve, Blanchflower and Oswald (1994) argue that wages are determined by a “wage curve ” that relates an individual’s wage to the level of the unemployment rate in their region or industry. Blanchflower and
Keyphrases
wage curve phillips curve unemployment rate individual wage david lebow expectations-augmented phillips curve kevin hassett macroeconomic data regional data andrew oswald standard macroeconomic expectations-augmented phillips curve original phillips curve federal reserve system helpful comment considerable empirical support
