Does Ultra-Low Unemployment Spur Rapid Wage Growth?

Sylvain Leduc, Chitra Marti and Daniel Wilson

FRBSF Economic Letter, 2019

Abstract: The unemployment rate ended 2018 at just under 4%, substantially lower than most estimates of the natural rate. Could such an ostensibly tight labor market lead to a sharp pickup in wage growth from its recent moderate pace, such that the relationship between wage growth and unemployment is not always linear? Investigations using state-level data show no economically significant nonlinearity between wage growth and unemployment that would predict an abrupt jump in wage growth.

Date: 2019
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