Munich Personal RePEc Archive

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.

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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.

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