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New Evidence on the Dynamic Wage Curve for Western Germany: 1980-2004

Badi Baltagi (), Uwe Blien () and Katja Wolf

No 103, Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University

Abstract: Blanchflower and Oswald (1994) reported that they have found an 'empirical law of economics'--the Wage Curve. Our paper reconsiders the western German Wage Curve using disaggregated regional data and is based on almost one million employees drawn from the Federal Employment Services of Germany over the eriod 1980-2004. We find that the wage equation is highly autoregressive but far from unit root. The unemployment elasticity is significant but relatively small: only between -0.02 and -0.04. We also check the sensitivity of this elasticity for different population groups (young versus old, men versus women, less educated versus highly educated, German native versus foreigner), confirming that it is stronger the weaker the bargaining power of the particular group.

Keywords: Wage curve; regional labor markets; Phillips curve; panel data (search for similar items in EconPapers)
JEL-codes: J30 C23 R10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2008-03
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Journal Article: New evidence on the dynamic wage curve for Western Germany: 1980-2004 (2009) Downloads
Working Paper: New Evidence on the Dynamic Wage Curve for Western Germany: 1980–2004 (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:max:cprwps:103

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