Search

The policy responses to Covid-19 have triggered large-scale reverse migration from cities to rural areas in developing countries, exposing the vulnerability of migrants living precarious lives in cities, giving rise to debates asserting to migration as undesirable and favouring policy options to discourage the process. However, the very basis of spatial concentration and formation of cities is presence of agglomeration economies, benefits accruing to economic agents operating in cities. Presence of these agglomeration benefits in local labour markets manifests themselves in the form of an upward sloping wage curve in urban areas. We estimate the upward sloping wage curve for various size classes of cities in Indian economy and establish the presence of positive returns to occupation and industry concentration at urban locations. Controlling for worker-specific characteristics influencing wages, we establish that higher the share of an industry or an occupation in local employment as compared to national economy, the desirability of firms to pay higher wages increases. For casual labourers, occupational concentration results in higher wages. However, impact of industry concentration varies across sectors. Results supporting presence of upward sloping urban wage curve, therefore, endorse policies to correct the market failure in cities and promote migration as a desirable process. JEL Classification Codes: J2, R2

Στόχος της παρούσας διδακτορικής διατριβής είναι η διερεύνηση της δομής των μισθών και των μισθολογικών διαφορών στην Ελληνική αγορά εργασίας, δεδομένων ορισμένων χαρακτηριστικών της, ιδιαίτερα εκείνων που σχετίζονται με το θεσμικό πλαίσιο που διέπει τη λειτουργία της αγοράς εργασίας και ρυθμίζει τις εργασιακές σχέσεις. Η διδακτορική διατριβή αποτελείται από τέσσερις ξεχωριστές μελέτες, ωστόσο τα ευρήματα και συμπεράσματα της κάθε μίας έχουν γενικότερη εφαρμογή και ερμηνεία. Το πρώτο μέρος της διδακτορικής διατριβής ερευνά τις μισθολογικές διαφορές που οφείλονται στο μέγεθος των επιχειρήσεων, όπως αυτό μετράται από τον συνολικό αριθμό των εργαζόμενων σε αυτές. Οι εκτιμήσεις πραγματοποιούνται μέσω της χρήσης διαστρωματικών ενοποιημένων δεδομένων εργαζόμενων-εργοδοτών. Τα αποτελέσματα των οικονομετρικών εκτιμήσεων υποδεικνύουν την ύπαρξη ενός μισθολογικού πλεονεκτήματος υπέρ των εργαζόμενων σε επιχειρήσεις μεγαλύτερου μεγέθους, το μέγεθος του οποίου είναι ανάλογο με αντίστοιχα εκτιμημένα πλεονεκτήματα τα οποία αναφέρονται στη διεθνή βιβλιογραφία. Επίσης, εξετάζεται η εγκυρότητα διαφόρων πιθανών ερμηνειών που έχουν προταθεί στην σχετική βιβλιογραφία. Σύμφωνα με τα αποτελέσματα των εκτιμήσεων, οι διαφορές σε ανθρώπινο κεφάλαιο, η ύπαρξη ανταποδοτικών αμοιβών, οι μισθοί αποδοτικότητας και η λειτουργία εσωτερικών αγορών εργασίας είναι παράγοντες ικανοί να ερμηνεύσουν το μεγαλύτερο μέρος του μισθολογικού πλεονεκτήματος υπέρ των εργαζόμενων σε μεγαλύτερες επιχειρήσεις. Σκοπός του δεύτερου κεφαλαίου της παρούσας διδακτορικής διατριβής, είναι η διερεύνηση των επιπτώσεων της σύναψης επιχειρησιακών συλλογικών συμβάσεων εργασίας στη δομή των μισθών στην αγορά εργασίας. Για τους σκοπούς της ανάλυσης χρησιμοποιούνται ενοποιημένα στοιχεία εργαζόμενων-εργοδοτών για το έτος 2006, εκτιμήσεις μη δεσμευμένων ποσοστημορίων καθώς και οι σχετικές μέθοδοι διαχωρισμού επιδράσεων. Τα αποτελέσματα επιβεβαιώνουν την ύπαρξη ενός μισθολογικού πλεονεκτήματος υπέρ των εργαζόμενων που καλύπτονται από επιχειρησιακές συλλογικές συμβάσεις εργασίας, το οποίο ακολουθεί μια κοίλη τάση κατά μήκος κατανομής των ατομικών αμοιβών. Επιπλέον, οι μισθολογικές διαφορές μεταξύ των εργαζόμενων που καλύπτονται από επιχειρησιακές συλλογικές συμβάσεις και εκείνων που καλύπτονται από συλλογικές συμβάσεις που υπογράφονται σε πιο κεντρικά επίπεδα διαπραγμάτευσης, οφείλονται σε διαφορές στον τρόπο συλλογικής διαπραγμάτευσης για όσους βρίσκονται στο αριστερό ήμισυ της συνολικής κατανομής των ατομικών αμοιβών, ενώ για όσους βρίσκονται στο δεξί ήμισυ της κατανομής, το μεγαλύτερο μέρος των μισθολογικών διαφορών εξηγείται από διαφορές στο ανθρώπινο κεφάλαιο και στα χαρακτηριστικά των επιχειρήσεων. Το τρίτο μέρος της διδακτορικής διατριβής ερευνά την ύπαρξη μιας καμπύλης μισθών στην Ελληνική αγορά εργασίας χρησιμοποιώντας μικροοικονομικά δεδομένα για την περίοδο 2001-2012.Τα εκτιμημένα αποτελέσματα υποδεικνύουν ότι ο “εμπειρικός νόμος της Οικονομικής Επιστήμης” σύμφωνα με τον οποίο υπάρχει μια βραχυχρόνια αρνητική σχέση μεταξύ ατομικών αμοιβών και τρέχουσας περιφερειακής ανεργίας, μπορεί να επιβεβαιωθεί μόνο για την περίοδο μετά το 2010, όπου μια σειρά δημοσιονομικών μέτρων και μεταρρυθμίσεων του θεσμικού πλαισίου των εργασιακών σχέσεων έλαβαν μέρος, με στόχο τη μείωση του μισθολογικού κόστους και την αύξηση του βαθμού ευελιξίας της αγοράς εργασίας. Πριν το 2010, δεν ήταν δυνατός ο προσδιορισμός μιας συστηματικής σχέσης μεταξύ ατομικών αμοιβών και περιφερειακής ανεργίας. Η ανυπαρξία μιας τέτοιας σχέσης, μπορεί να αποδοθεί κυρίως σε θεσμικές δυσκαμψίες οι οποίες απαγόρευαν τις μισθολογικές προσαρμογές προς τα κάτω. Το συμπέρασμα αυτό ενισχύεται από το γεγονός ότι η ύπαρξη καμπύλης μισθών πριν το 2010, δεν επιβεβαιώνεται ανεξάρτητα από το επίπεδο των συλλογικών διαπραγματεύσεων στο οποίο προσδιορίζονται οι αμοιβές στην Ελληνική αγορά εργασίας. Τέλος, το τέταρτο μέρος της παρούσας διδακτορικής διατριβής πραγματοποιεί την πρώτη αποτίμηση μιας πρόσφατης θεσμικής μεταρρύθμισης στην Ελληνική αγορά εργασίας. Σκοπός της μεταρρύθμισης αυτής είναι η αποκέντρωση του συστήματος των συλλογικών διαπραγματεύσεων έτσι ώστε να διευκολύνεται η προσαρμογή των μισθών στα χαρακτηριστικά των επιχειρήσεων και στις επικρατούσες συνθήκες στην αγορά εργασίας. Για τους σκοπούς αυτής της μελέτης, αναπτύχθηκε μια μοναδική βάση δε-δομένων αποτελούμενη από πληροφορίες που προέρχονται από το σύνολο των επιχειρησιακών συμβάσεων που υπογράφηκαν στην Ελληνική αγορά εργασίας τα τελευταία χρόνια. Τα αποτελέσματα μιας σειράς εκτιμήσεων υποδειγμάτων περιορισμένων εξαρτημένων μεταβλητών υποδεικνύουν ότι η εισαγωγή της νέας εργασιακής νομοθεσίας επηρεάζει σημαντικά την πιθανότητα τα διαπραγματευόμενα μέρη να συμφωνήσουν σε προς τα κάτω μισθολογική προσαρμογή, ειδικά στο επίπεδο του κατώτατου μισθού που περιγράφεται στην Εθνική Γενική Συλλογική Σύμβαση Εργασίας, ενώ οι τρέχουσες συνθήκες που επικρατούν στην αγορά εργασίας είναι επίσης σημαντικοί προσδιοριστικοί παράγοντες των συμφωνηθεισών μισθολογικών προσαρμογών.

This study investigates the relationship between unemployment and employee loyalty across UK regions. It is argued that higher regional unemployment depresses wages and increases the cost of a potential job loss, thus providing an incentive for employees to be loyal to their employer. Using data from the Work and Employment Relations Survey (WERS), the results confirm the positive association between regional unemployment and employee loyalty. A disaggregated analysis by type of business reveals that this association is stronger in the private sector. The study adds a spatial dimension to an emergent literature that examines how unemployment affects the employed.

Public pension systems are usually pay-as-you-go financed, that is, current contributions cover the pension expenditures. However, some countries combine funding and pay-as-you-go within the first pillar. This article studies a mixed system where a part of the individual’s contribution accrues funded rights whereas the other part accrues pay-as-you-go rights. Diversification conditions between these two financing techniques are derived in a mean–variance framework for two distinct contexts: for a cohort entering the system (named ex-ante case) and for multiple cohorts coexisting at the same period of time (named ex-post case). The diversification benefits in presence of a liquidity constraint which ensures that the income from contributions is sufficient to cover the pension expenditures are also studied. We show that, on the one hand, diversification benefits individuals when the economy is dynamically efficient for the ex-ante case. On the other hand, diversification is unattractive when pay-as-ou-go and funding are positively correlated for the ex-post case.

This paper reconsiders the Brazilian wage curve using individual data from the National Household Survey at 27 Federative Units over the period 2002–2009. We find evidence in favor of the Brazilian wage curve with an unemployment elasticity of −0.08. We also find that males in Brazil are significantly more responsive to local unemployment rates (−0.13) than their female counterparts. In fact, we find that the unemployment elasticity for women is statistically insignificant. Applying gender-specific unemployment rates, the elasticity for men decreases to −0.09, while the elasticity for women remains statistically insignificant. This paper also finds that the estimates for Brazilian wage curve are completely different for the case of formal and informal workers.

Using cross-sectional data from the Labour Force Survey, we investigate whether a wage curve, i.e. a negative relationship between real wages and regional unemployment, could be estimated in the Greek labour market and in the period 1999–2014. Adopting individual static and regional dynamic specifications, our results do not support the existence of such a relationship despite the extensive macroeconomic adjustment of real wages after 2009. However, allowing for period-specific heterogeneous slopes, we find that a negative relationship between wages and regional unemployment emerged in the period 2010Q2–2011Q4 which however was short-lived. This relationship appears to be exclusively due to the restructuring of the collective bargaining regime and the reduction in the national minimum wages, both of which were implemented in the private sector.

This paper analyzes the joint influence of migration inflows and outward foreign direct investment (FDI) on wage bargaining. Labor migration and offshoring supported by FDI affect wage deals by changing the outside options of workers and firms. Unemployed workers may find alternative jobs either in the legal or in the illegal labor markets. Wages in this latter case are highly affected by migrants crowding this segment more than any other market. Firms may have the option of moving production partly or entirely to foreign low-cost countries. A wage curve is designed theoretically, reflecting cross-border labor and capital mobility, and estimated on panel data for 13 European countries over the period 1995–2013. The theoretical predictions of a joint negative effect on wages of FDI outflows and labor migration inflows are confirmed with some novel results.

This paper tests the wage curve, a negative relationship between local unemployment rates and real wages in Nigeria, in 2004 using a household survey data. Both the cell-mean and micro-data regressions estimates refute the wage curve hypothesis in Nigeria. Instead, the findings show a positive relationship between real wages and unemployment in Nigeria in the period observed. An intuition from this is that wages in the country are downward rigid to distortions in the labour market. The positive relationship between real wages and jobless rates could partly explain the rising income inequality pattern in the country.

IntroductionAccording to Takahashi (2004), the essence of the Japanese-style personnel system is that (i) it is not a system that rewards work with pay, but instead rewards work with new work. The content of one's expected new work in itself functions as a motivation, and this is the most natural model in the theory of intrinsic motivation. On the other hand, (ii) the pay system at Japanese firms has not been designed merely for motivation; the wage curve has been designed from the perspective of guaranteeing living expenses. The type of wage curve based on a so-called age-based living expense guarantee was designed to be merely a baseline or mean with a wide range. The combination of (i) and (ii) has supported the growth of Japanese firms. This is clearly not a seniority system; it is a system that differentiates based on seniority.Takahashi (2004) referred to this as the Japanese-style seniority-based system. In particular, (i) the theory of new work in reward for work is termed as the Work-Work Theory. In contrast, the generally assumed theory of pay in reward for work is termed as the Work-Pay Theory.In the Work-Pay Theory, performing one's job well simply leads to a higher pay, whereas not performing one's job well leads to a lower pay. If such a system merely differentiated pay with no change in job content, pay would continue to fluctuate within the same range throughout one's career. This is because regardless of the years of work experience one accumulates, one's job content would remain unchanged. For example, a situation would never arise in which those responsible for making photocopies could do their job so well that their pay would skyrocket above the rewards earned by the company's president. They would only be paid an amount commensurate with the copying duties. In other words, the Work-Pay Theory does not encompass promotions or advancement, and it only raises pay for good performance and lowers pay for poor performance. Thus, the initial "work" differential continues until retirement. In a society run under the Work-Pay Theory, people who want to advance above a certain pay level must change their jobs. If they do not change their jobs, the situation would never arise in which their company would give them an advancement, a promotion, or even a real raise. Thus, the company would never commit such a folly of employing new hires if both veterans and new hires were employed at the same pay level, with the same pay given for the same work, regardless of job seniority. The unemployment rate among youth in European countries would inevitably be high compared with the unemployment rate of youth in Japan.In contrast, under the Work-Work Theory system, the work on which employees' performance evaluation is based becomes increasingly challenging, and their pay increases as they advance to higher wage brackets. Because competition within the firm accelerates the differentials in work content, while it may sound contradictory, pay differentials over the long run are actually much easier to increase under a system that operates according to the Work-Work Theory than under the system following the Work-Pay Theory. This paper discusses the characteristics of the Work-Work Theory that can generally be observed in Japanese firms.For this, let us now focus on actual system operation, rather than on the formal setup of Japanese firms. For example, considering the cases of several factories, Abegglen (1958) states that although the pay systems of those working in the factory and of those working in the office differ, "the output generally exceeds the standard figure, the productivity allowance remains remarkably stable in amount and is taken to be a regular part of the worker's income. The pay system rests on the base-pay formula, which is a function of age and education" (Abegglen, 1958, pp. 50-54). In other words, Japanese seniority-based pay was not originally considered to be a pay system; it was considered to be a system operation. …

Combining a spatial equilibrium model with a search-matching unemployment model, this paper analyzes the willingness to pay for regional amenities and the regional quality of life when wages, rents, and unemployment risk compensate for local amenities and disamenities. The results are compared with those obtained from the Rosen-Roback approach. We demonstrate that the traditional approach gives too much weight to the wage differential if search frictions are significant. Furthermore, the paper confirms that the wage curve is negatively sloped for quasi-linear utility. Specifically, the wage rate increases and the unemployment rate decreases in response to an increase in the amenity level if the amenity is marginally more beneficial to producers than to consumers.

This paper reconsiders the Polish wage curve using individual data from the Polish Labor Force Survey (LFS) at the 16 NUTS2 level allowing for spatial spillovers between regions. In addition it estimates the total and gender-specific regional unemployment rate elasticities on individual wages. The paper finds significant spatial unemployment spillovers across Polish regions. In addition, it finds that the results for the Polish wage curve are sensitive to gender-specific regional unemployment rates. This is especially true for women.

This study is an empirical examination of the existence and characteristics of the Phillips curve and the wage curve in Bosnia and Herzegovina. The findings indicate that there is no evidence of the existence of the short-term Phillips curve. Instead, the data suggests that in the short-term an increase in inflation leads to an increase in unemployment. The estimated wage curves indicate that only increases in real payment increase employment. The conclusion of this study is that increases in inflation might have a negative short-term impact on the level of employment in Bosnia and Herzegovina.

We offer strong evidence of a wage curve mechanism in Greece, which seems to be substantially enhanced by reforms aimed at increasing labour market flexibility. Male, older, more qualified and rural employees appear to be more sensitive to regional unemployment.

This paper uses microeconomic data for the period from 1990 to 2004 to examine the relationship between public–private sector wage differentials and labour market conditions in Finland. The results show that the public sector wage premium is strongly counter-cyclical. On average, a 10 percent increase in the local unemployment rate increases the public–private sector wage gap by one percent. Separate analyses by government sector and quantiles of the distribution of wages reveal that it is local government workers and those working at lower skill levels who benefit more from increasing unemployment rate. The paper also exploits the longitudinal structure of the data to examine whether the results are constant over time. These results indicate that the cyclical pattern primarily emerges in years with deteriorated labour markets.

This paper presents wage curves for formal and informal workers using a rich individual level data for Turkey over the period 2005-2009. The wage curve is an empirical regularity describing a negative relationship between regional unemployment rates and individuals' real wages. While this relationship has been well documented for a number of countries including Turkey, less attention has focused on how this relationship differs for informal versus formal employment. This is of utmost importance for less developed countries where informal employment plays a significant role in the economy. Using the Turkish Household Labor Force Survey observed over 26 NUTS-2 regions, we find that real hourly wages of informal workers in Turkey are more sensitive to variations in regional unemployment rates than wages of formal workers. This is true for all workers as well as for different gender and age groups.

It is commonly claimed that the South African labor market is unusually inflexible owing to the strength of the country's unions and the system of centralized collective bargaining. One sign of labor market inflexibility is low responsiveness of wages to local unemployment. Analyzing data from the South African Living Standards Survey, the authors find that the elasticity of wages with respect to local unemployment rates in South Africa in 1993 was about -0.1. The similarity of this elasticity to that found in other countries, including the United States and the United Kingdom, is surprising given South Africa's national unemployment rate of over 30%. The wage curve elasticity persists over a much wider range of unemployment rates in South Africa than in OECD countries, implying that unemployment in South Africa can have a large impact on wages. (Free full-text download available at http://digitalcommons.ilr.cornell.edu/ilrreview/.)

Individual sales prices and local vacancy rates in the housing market pose a natural analogy to the wage curve, a popular concept in labor economics that describes how individual wages decrease with higher local unemployment. While housing search and matching models and housing externalities strongly suggest a stable inverse relationship, there is still a lack of convincing empirical research on the sensitivity of house sales to local vacancy variation. Based on more than 10,000 single-family home transactions from the German market, this paper confirms a robust house price-vacancy curve among individual home prices and adjacent residential vacancies. The economic size of the relationship is highly comparable across all four analyzed states: a doubling of the vacancy rate at the municipality level is associated with a 5-8% discount in quality-controlled selling prices. Despite negative price signals, local vacancy distributions tend to persist over long time horizons, leaving room for policy intervention.

The paper presents a theoretical analysis of macroeconomic effects of employment subsidy programmes and training/education programmes when the economy faces a macroeconomic shock. Wages and employment are determined by the intersection of demand curves and wage-setting schedules. The wage curve is derived from the Shapiro-Stiglitz efficiency-wage model. Employment subsidy programmes decrease the risk of being unemployed and tend to keep the welfare of workers. Training programmes upgrade labour skill and tend to transfer labour from a low-productivity to a high-productivity sector. Both programmes tend to increase the welfare of workers. However, the macroeconomic impacts of these two programmes on wages and labour productivity are different. The paper investigates and compares the macroeconomic influences of subsidised employment programmes and training/education programmes in a dual labour-market framework.

The wage curve postulates that the wage level is a decreasing function of the regional unemployment rate. In testing this hypothesis, most studies have not taken into account that differences in the institutional framework may have an impact on the existence (or the slope) of a wage curve. Using a large-scale linked employer–employee dataset for Western Germany, this article provides a first direct test of the relevance of different bargaining regimes (and of works councils) for the existence of a wage curve. In pooled regressions for the period 1998 to 2006, as well as in worker-level or plant-level fixed-effects estimations, we obtain evidence for a wage curve for plants with a collective bargaining agreement at firm level. The point estimates for this group of plants are close to the −0.1 elasticity of wages with respect to unemployment postulated by Blanchflower and Oswald. In this regime, we also find that works councils dampen the adjustment of wages to the regional unemployment situation. In the other regimes of plants that either do not make use of collective contracts or apply sectoral agreements, we do not find a wage curve.

The objective of this paper is to examine the inter-industry and labour market occupational effects of future demographic changes, using a dynamic general equilibrium overlapping-generations model. The model is calibrated along a balanced-growth path, taking into account labour-augmenting (Harrod-neutral) technical progress. It also accounts for heterogeneity at the household level, using 25 occupations-specific earnings profiles. In addition to the impact of slower labour force growth, the model captures the shift in sectoral composition of final demand. The latter is due to different consumption preferences of older individuals. Moreover, a wage curve is introduced to explore the impact of population ageing on the unemployment rate. The simulation results indicate that the growth in real GDP per capita could decline by nearly one percentage point between 2006 and 2050. Besides, the production of services, in percent of total GDP, is projected to increase in the long-run, although the analysis shows more modest changes in production shares than in previous studies. The results also suggest that the equilibrium unemployment rate is likely to decline by more than 2 percentage points in the long run. The impact also varies quite significantly at the occupational level.

The paper presents empirical evidence on wage formation in Norway using annual time series data for manufacturing industry. First, we show that long-run effects on consumer prices and taxes depend strongly on the exact definition of the empirical variables. Using the implicit factor income deflator, the wedge between consumer's and producer's real wages is insignificant. Second, our results indicate that there is a long-run tradeoff between the wage level and the unemployment ratio and the Phillips curve specification is firmly rejected. Third, the paper presents empirical evidence in favour of a strongly non-linear wage curve. Fourth, our results support the long-term unemployment hypothesis, as increased proportion of long-term unemployment shifts the wage curve outwards and to the right.

The Italian Wage Curve. The Effects of the Recent Labour Market Reforms The paper examines some effects of the recent reforms aimed at increasing flexibility in the Italian labour market. It shows their incapability to respond to the “inclusion” problem which still characterises the country. New temporary low-skill jobs were created but the reforms have neither enforced industrial competitiveness nor increased productivity. Far from solving the problems of a dual economy, de-regulation of Italian labour market has reinforced them and has concurrently eroded civil rights thereby making a departure form standards of health and morality. Excessive turnover of workers and firms is a major obstacle to human capital accumulation. A hostile territory produces social inequality, poverty and under- consumption that severely compromises growth. Key words: Labor and Demographic Economics; Wages, Compensation and Labor Costs; Wage Level and Structure; Wage Differentials JEL Classification: J, J3, J31 Final version received May 2008

Based on a re-parameterised Blanchflower–Oswald model this paper uses long macro-data from the OECD countries to discriminate between the Philips curve and the wage curve and examines whether there are any differences in wage dynamics between Europe and the United States. The evidence gives support for the Phillips curve and shows that wage dynamics are no different between the United States and Europe.

Blanchflower and Oswald [Blanchflower, David G. and Oswald, Andrew J., 1994a, The Wage Curve, (Cambridge, MA, MIT Press), Blanchflower, David G. and Oswald, Andrew J., 1994b, Estimating a Wage Curve for Britain 1973–90, The Economic Journal 104, 1025–1043. Eine praktische Einfuhrung, Nurnberg] 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 period 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.

This study develops an efficiency wage model that generates a wage curve at the regional level and a Phillips curve at the national level, under the assumption that workers' efficiency depends on both regional and aggregate labor market conditions. An equation relating wages to unemployment and lagged wages is derived from the profit-maximizing behavior of firms, and it is demonstrated that the coefficient on lagged wages is less than 1 with regional data but equals 1 with aggregate data. In addition, there is an equilibrium relationship between unemployment and wages at the regional level, but not at the aggregate level.

Livanos I. The wage–local unemployment relationship in a highly regulated labour market: Greece, Regional Studies. Using data obtained from 80 000 employees, this paper examines the relationship between individual wages and regional unemployment in Greece. The findings highlight the dynamics of the local labour markets in a case such as Greece, where the Organisation for Economic Co-operation and Development (OECD) claims that wage flexibility is limited. This study does not find evidence that wages in Greece are rigid, but finds a wage curve elasticity of close to − 0.1, which corresponds to evidence from many counties. Interestingly, graduates are found to be the most responsive group of workers to the behaviour of local labour markets. Livanos I. Le rapport salaire-chomage local dans un marche du travail extremement reglemente: la Grece, Regional Studies. A partir des donnees provenant de 80.000 salaries, cet article cherche a examiner le rapport entre les salaires des individus et le chomage regional ...

Since the publication of the book by Blanchflower and Oswald in 1994, a growing literature has focused on the analysis of the wage curve, an empirical relationship between individual wages and regional unemployment. The most relevant conclusion of these studies is that there is a negative relationship between the two variables with a common elasticity across countries, which is close to −0.10. In this paper, we apply descriptive meta-analytical techniques in order to provide a quantitative summary of the available evidence regarding the wage curve. The obtained evidence casts some doubts on the stability of microeconomic wage flexibility as significant differences across countries, time periods and groups of workers are found. Eine Meta-Analyse mikrookonomischer Flexibilitat (die Lohnkurve) Seit der Veroffentlichung des Buches von Blanchflower und Oswald im Jahre 1994 beschaftigt sich die okonomische Literatur verstarkt mit dem Thema der Lohnkurve, d. h. dem Zusammenhang zwischen Lohnen und reg...

According to the standard union bargaining model, unemployment benefits should have big effects on wages, but product-market prices and productivity should play no role in the wage bargain. We formulate an alternative strategic bargaining model, where labour and product-market conditions together determine wages. A wage equation is derived and estimated on aggregate data for four Nordic countries. Wages are found to depend not only on unemployment and the replacement ratio, but also on productivity, international prices and exchange rates. There is evidence of considerable nominal wage rigidity. Exchange rate changes have large and persistent effects on competitiveness.

Our new empirical evidence suggests that wages are substantially flexible in South Korea. In particular, our longitudinal evidence on the wage curve follows the minus-point-one rule, set up by Blanchflower and Oswald (1994) and is consistent with evidence from other countries.

This paper presents and analyses the sharp increase in hourly wage inequality after 1998 in Poland. The increase was similar in magnitude to the much-studied increase in British wage inequality during the 1980s. Using data from the Polish Labour Force Survey, we find this increase to be associated with rising wage differentials and within-group variances at both the upper and lower ends of the wage distribution. These increases are associated with differences in wage-setting patterns between the public and private sector as well as with the rapid increase in demand for educated labour. One important difference between the sectors is the lack of an impact of local labour market conditions, or wage curve, clearly evident in private sector wages, on public sector wages.

This paper provides empirical evidence on regional labor market flexibility in Europe and, in particular, in the EU-accession countries in Central and Eastern Europe. Whereas substantial regional disparities in unemployment are found for pre-accession EU member countries as well as for accession countries, an empirical analysis taking account of spatial effects shows that regional wage flexibility is significantly higher for accession countries. Moreover, unemployment disparities are found to be less persistent in the accession countries.

Panel data from the United Kingdom are used to estimate a wage curve that allows simultaneously for time, individual, and spatial effects and which thus finesses the problem of grouped data bias. Once allowance is made for the multilevel and cross-classified nature of the data, estimates of the unemployment elasticity of the wage are seen to be volatile and imprecise.

Most empirical studies on the Spanish wage curve have ignored the possible spatial interaction effects between the regions. This paper reconsiders the Spanish wage curve using more recent data than previous studies and taking into account the role of regional spillovers. From a methodological perspective, we apply the two-step procedure proposed by Bell et al. (2002) to estimate a dynamic wage curve with spatial spillovers. In a first stage, we use microdata from the Spanish Social Security Records (Muestra Continua de Vidas Laborales) to obtain composition-corrected wages that are used in a second stage to estimate a wage curve over the period 2000-2010 allowing for spatial effects of unemployment across regions. Opposite to previous studies, we find that the wage equation is highly autoregressive and that regional spillovers are relevant to explain the relationship between unemployment and wages in the Spanish provinces. © 2014 Springer-Verlag Berlin Heidelberg.

This article shows how the impulses of the transformation process in eastern Germany have spread through the economy and the labour market. The form of transformation has long-term effects on the form of control over the economy; it is managed largely from western firms. This fact has manifold consequences for the innovation behaviour of plants, among others, which in turn is further related to productivity and thus to the labour market. We argue that this transfers further to persistently lower wages and higher unemployment rates in eastern compared with western Germany.

Most ‘wage curve’ studies treat local labour markets as independent ‘islands’ in the national economy. However, when a local labour market is in close proximity of other labour markets, a local shock that increases unemployment may not lead to lower pay rates if employers fear outward migration of their workers. Hence, the unemployment elasticity of pay will be greater, the more isolated the local labour market is. Wages are also expected to be higher in regions that interact strongly with other regions. These hypotheses are confirmed by means of an estimation of wage curves with data for 327 regions of western Germany over the period 1990-97. Key words: Unemployment, wage formation, spatial analysis, local monopsony, Germany JEL classification: J21, J30, R23

We use longitudinal micro data to examine the wage curve for the euro area over the period 1994–2001. The overall unemployment elasticity in the euro area is − 0.14. The elasticity varies across groups of workers and along the wage distribution.

Are jobless persons who want work but are not actively searching, unemployed or out of the labour force? Previous research on this issue has focused on North America and used as the test whether the probability of transition to employment is similar for searching and non-searching jobless persons. This paper develops three new tests as to whether those not searching but wanting work are distinct from the searching unemployed. It asks: are non-searching persons richer, happier, and do they have a lesser impact on local wages, than the searchers? These tests are implemented using data from South Africa, a country in which unemployment is very high and where the treatment of non-searchers really matters for the understanding of poverty and labour market issues. The results favour the "discouraged worker" view of the non-searching unemployed and the use of the broad, inclusive, measure of unemployment.

This paper uncovers evidence on the distribution of wages in Belarus in the second half of the 1990s. The returns to education and work experience are high and stable. While the former is a typical finding of transition studies, the latter is not. This might be due to the pervasive role of the state in fixing wages in the dominant budget sector, rather than to market forces coming into play. Women experience a small, though largely unexplained wage gap coupled with higher than average returns to education. A wage curve effect is found, which is similar in size to that of other transition countries, but much higher than in market economies. Comparative Economic Studies (2006) 48, 351–376. doi:10.1057/palgrave.ces.8100071

This discussion paper resulted in a publication in the Journal of Applied Economics, 9, 235-54. In flow models of the labor market, wages are determined by negotiations between workers and employers on the surplus value of a realized match. From this perspective our study presents an econometric analysis of the influence of labor market flows on wage formation as alternative to the traditional specification of wage equations where unemployment represents the Phillips-curve or wage curve-effects. We estimate a dynamic wage equation for the Netherlands using a cointegration approach. We find that labor flows, and notably flows from outside the labor market, are important determinants for both short run and long run wage setting

The wage curve is the negative relationship that links wage levels to the unemployment rate. It fits accurately with modern non-competitive labour-market models, but goes against a Phillips-curve modelling, because the latter ties wage growth to the unemployment rate. In this article, we present a comprehensive review of these non-competitive models, highlighting recent contributions that try to eliminate the possible 'gap' that exists between the concepts of the wage curve, on the one hand, and the Phillips curve, on the other. Copyright Blackwell Publishers Ltd, 2005.

There is evidence in many countries of an inverse relationship between the real wages paid to workers and the unemployment rate in their local labor market, a so-called wage curve. However, the evidence to date for Japan has been rather limited. In this paper, we estimate wage curves for Japan using pooled cross-section time-series data from 1981 until 2001. The presence of a wage curve is confirmed. The wage curve has become slightly more elastic after the bubble economy of the 1980s than it was in the pre-bubble and mid-bubble period. The unemployment elasticity of pay is greater for males than for females. We also estimate regional wage curves using time-series data. The male wage curve elasticity is larger in the northern regions of Hokkaido and Tohoku and the western region of Shikoku, while it is smaller in the central regions of Hokuriku, Tokai and Kinki.

The panel data evidence in this article shows that the wage curve does not exist in China when utilizing the provincial unemployment rate. However, the wage curve exists when utilizing the provincial youth unemployment rate. Youth unemployment data are more reliable in China, as they are not distorted by the exclusion of significant numbers of adult laid off workers from the more familiar unemployment statistics. It is also found that the semi-log function is a good approximation for urban wage curve of China. The wage unemployment relationship becomes more negative when utilizing fixed effects and random effects models.

This paper tests whether a wage curve—a negative relationship between the level of unemployment and the level of pay—existed in Chile during 1957–96. The analysis is divided into two periods. For 1957–73, during inward‐led development, we reject the existence of a wage curve. For 1974–96, when the economy opened, state‐run industries were privatised and labour rights weakened, we find a wage curve of −0.08. Based on this finding we conclude that the unemployment–pay elasticity in the post‐reform period is similar to the −0.07 to −0.10 wage curve found in other western, capitalist countries. Disaggregating the analysis by group, we find that women, non‐university educated workers and public sector workers have suffered more from unemployment. Yet informal sector workers have not experienced pay drops as a result of unemployment, contradicting the hypothesis that the informal sector acts as a buffer during economic downturns.

The impact of the recent Customs Union (CU) agreement between Turkey and the European Union on internal migration is studied using an intra-industry trade Computable General Equilibrium (CGE) model with intersectoral capital mobility under two alternative specifications for the labor market: the traditional Harris-Todaro approach and the existence of a “wage curve” in the urban sector. Under both specifications, the numerical results show that the CU is welfare enhancing and causes a reduction of the urban-rural wage gap as suggested by theoretical studies. At the same time, it leads to rural-to-urban migration and raises the capital rent, results that are counter intuitive with respect to the dual economy literature. Furthermore, the rise in formal labor demand and the migration response to the CU have not resulted in an increase in urban unemployment (i.e. the “Todaro paradox”), but rather to a fall in the unemployment pool. The study also shows that the Bhagwati-Srinivasan proposal of maximizing welfare by uniformly subsidizing the entire labor market is impracticable, especially if the high wage union sector can negotiate employment conditions.

This paper examines wage flexibility in five EU countries by estimating their respective wage curves. Using information provided by a homogeneous panel data set - the ECHP - we are able to demonstrate that, contrary to the habitual finding, the wage elasticity to unemployment in fact varies across countries. © 2002 Elsevier Science B.V. All rights reserved.

Summary It is commonly known that every economy is faced with the problem of unevenly distributed labour demand changes across industries, occupations and regions. In competitive labour markets flexible wages and the mobility of labour would lead to a new equilibrium distribution of wages and employment. Regional or industrial unemployment dispersion in Germany is often blamed on a lack of wage adjustments and the lack of labour mobility when economic fortunes are not distributed evenly, but this hypothesis is hardly ever tested. This paper asks how wage reactions in Germany compare with responses in the United States using individual level data. As a first step labour demand shocks are estimated from employment time series data using deterministic detrending and the Hodrick-Prescott filter. These are then included in typical wage regressions based on micro data. The results propose that German labour markets are not as inflexible as simple evidence might suggest. Although wages are regionally only flexible in the United States, wages are found to react to industrial labour demand shocks in both countries. Especially for more experienced and therefore less mobile groups in the German labour market wages react to industrial labour demand shocks.

This paper extends Blanchflower & Oswald's (1994) work on the wage curve to the 50 largest metropolitan areas in the United States. The wage curve is more elastic in US metropolitan areas than prior research shows for the nation as a whole, and the wage curve varies over the business cycle, becoming more elastic in periods of higher unemployment. The most striking finding is that black workers have a more elastic wage curve than do white workers. Estimating the wage curve with the non-employment rate, a measure of underemployment, shows elasticities that are substantially higher than for wage curves estimated with the unemployment rate. This trend further increases the negative effects on pay for blacks, who are more likely than white workers to be underemployed.