The Wage Curve Reloaded

David Blanchflower and Andrew Oswald

No 1665, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper provides evidence for the existence of a wage curve – a micro-econometric association between the level of pay and the local unemployment rate – in modern U.S. data. Consistent with recent evidence from more than 40 other countries, the wage curve in the United States has a long-run elasticity of approximately -0.1. In line with the paper's theoretical framework: (i) wages are higher in states with more generous unemployment benefits, (ii) the perceived probability of job-finding is lower in states with higher unemployment, and (iii) employees are less happy in states that have higher unemployment. We conclude that it is reasonable to view the wage curve as an empirical law of economics.

Keywords: wages; unemployment; wage curves (search for similar items in EconPapers)
JEL-codes: E2 J3 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2005-07
New Economics Papers: this item is included in nep-lab, nep-ltv and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (206)

Downloads: (external link)
https://docs.iza.org/dp1665.pdf (application/pdf)

Related works:
Working Paper: The Wage Curve Reloaded (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp1665

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().