The "wage curve" and long-term unemployment: a cautionary note

Article Abstract:

Econometric evidence for the wage curve posited by Layard and Nickell and reconfirmed by Blackaby and Manning were reeaxamined using data from UK and US unemployment surveys. The study indicated that the wage curve is evident only in terms of short-term unemployment. These findings imply that that government can directly intervene in the labor market on behalf of the long-term unemployed without adding to the inflationary pressure on wages. Moreover, analysis using the Mincer earnings function indicate that high-wage regions need higher rates of unemployment to give rise to conditions of positive correlation between wages and unemployment.

Research, Analysis, Employment surveys

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Nominal wage flexibility in a partly-unionized economy

Article Abstract:

An economy with unionized, competitive, and rigid labor markets has complicated intersectoral feedback mechanisms affecting the relationship between nominal wages and demand changes. The responsiveness of unionized wages to changes in nominal demand depends on either relative sectoral size or the substitutability of goods, given the type of preference assumed. The results suggest that Classical to Keynesian macroeconomic behavior is possible in a heterogeeous economy, depending on its microeconomic structure.

Prices and rates, Labor market, Labor unions, Wage price policy, Wage-price policy

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Optimal job acceptance when the wage offer distribution is known

Article Abstract:

Assumptions in job search theory are dropped in an attempt to characterize the equilibrium unemployment information rate. Assuming that the wage offer distribution is unknown, job search theory is shown to be inefficient. However, if the individual is not retricted from searching while still employed, he will make the optimal job decision despite being ignorant of the true offer distribution.

Labor supply, Labor force, Job offers

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