The wage inflation-unemployment curve at the macroeconomic level

Saglio, Sophie and lopez-villavicencio, antonia (2015): The wage inflation-unemployment curve at the macroeconomic level.

Abstract

This paper tests the reduced form New Keynesian Wage Phillips Curve in several advanced countries for the 1985-2014 period. Based on this approach, we estimate wage rigidity at the aggregate level. We document that rigidity is heterogenous among our sample of countries: nominal wage rigidities are more important in the United States, while wage indexation is dominant in European Countries. We also present evidence that wage rigidity is not linked to the institutional environment at the macroeconomic level. Finally, we show that there is significant time variation in the estimated coefficients on the implied equation that is usually not taken into account in the theoretical literature.

• Item Type: MPRA Paper
• Language: English
• Keywords: wage rigidity, European Union, New keynesian Wage Phillips Curve
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General

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