Unemployment and Real Wages in Britain, 1967-1983

Martin Robson

Oxford Economic Papers, 1989, vol. 41, issue 4, 789-801

Abstract: This paper proposes an aggregate wage equation in which the likelihood of becoming unemployed and the duration of unemployment exert distinct and separable influences on wage determination. It is argued that this distinction may help to explain the failure of persistently high unemployment to restrain the growth of real wages in Britain during the 1980s. The equation is tested against an alternative model, which is based on the Layard and Nickell proposition that while the short-term unemployed exert downward pressure on wages, the long-term unemployed do not. Copyright 1989 by Royal Economic Society.

Date: 1989
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