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Recent research has examined the link between rising educational attainment and its impact on inflation, via the equilibrium rate of unemployment. Studies such as Daly et al. (2007) have found that a measure of aggregate unemployment that has been adjusted for changes in the educational structure of the U.S. performs well in the Phillips curve, and that accounting for the level of education allows for superior estimation of group-specific Phillips curves. In this paper we consider what happens when the aggregate model is applied to a broader sample of countries, including both advanced and developing economies. We find that the education-adjusted unemployment gap does little to help estimate the inflation-unemployment tradeoff for a wider range of countries. Moreover, we find little evidence of a Phillips curve over the period of 1999 to 2008 for the developing countries in our sample. We also implement a gender-adjusted unemployment gap, and find that this variable is significant, but only because labor force shares have not changed substantially during the time period tested.

This paper examines the long-run relationship between inflation and a new measure of the price-marginal cost markup. This new markup index is derived while accounting for labor adjustment costs, which a large number of the papers that estimate the markup have ignored. We then examine the long-run relationship between this markup measure, which is estimated using U.S. manufacturing data, and inflation. We find that decreases in the markup that are associated with a percentage point increase in inflation are much smaller than previous studies have found.