On the negative relationship between the wage rate and the unemployment rate: application of efficiency wage models

Yu Hsing

Applied Economics Letters, 2009, vol. 16, issue 6, 645-647

Abstract: Applying efficiency wage models, this article finds that there is a strong evidence of a negative wage curve for the state of Alabama. The elasticity of the wage curve is estimated to be -0.28, suggesting that the wage rate in Alabama is much more sensitive to a change in the unemployment rate than the USA and there exist segmented labour markets. The log-linear function performs slightly better than the semi-log function.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:16:y:2009:i:6:p:645-647

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DOI: 10.1080/13504850601032081

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