NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Estimating a Wage Curve for Britain 1973-1990

David G. Blanchflower, Andrew J. Oswald

NBER Working Paper No. 4770 (Also Reprint No. r1936)
Issued in June 1994
NBER Program(s):   LS

Following Phillip's original work on the UK, applied research on unemployment and wages has been dominated by the analysis of highly aggregated time-series data sets. However, it has proved difficult with such methods to uncover statistically reliable models. This paper adopts a different approach. It uses microeconomic data on 175,000 British workers from 1973-1990 to provide evidence for the existence of a negatively sloped relationship linking the level of pay to the local rate of unemployment. This 'wage curve' is found to have an elasticity of approximately -0.1. Contrary to the Phillips Curve, no autoregression is found in wages. The paper casts doubt on standard ideas in macroeconomics, regional economics and labour economics.

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Document Object Identifier (DOI): 10.3386/w4770

Published: Economic Journal, September 1994, Vol. 104, No. 426, pp. 1025-1043.

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