Estimating a Wage Curve for Britain 1973-1990

33 Pages Posted: 11 Sep 2007 Last revised: 16 Jul 2022

See all articles by David G. Blanchflower

David G. Blanchflower

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER); University of Stirling - Department of Economics

Andrew J. Oswald

University of Warwick - Department of Economics; IZA Institute of Labor Economics

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Date Written: June 1994

Abstract

Following Phillip's original work on the UK, applied research on unemployment and wages has been dominated by the analysis of highly aggregated time-series data sets. However, it has proved difficult with such methods to uncover statistically reliable models. This paper adopts a different approach. It uses microeconomic data on 175,000 British workers from 1973-1990 to provide evidence for the existence of a negatively sloped relationship linking the level of pay to the local rate of unemployment. This 'wage curve' is found to have an elasticity of approximately -0.1. Contrary to the Phillips Curve, no autoregression is found in wages. The paper casts doubt on standard ideas in macroeconomics, regional economics and labour economics.

Suggested Citation

Blanchflower, David G. and Oswald, Andrew J., Estimating a Wage Curve for Britain 1973-1990 (June 1994). NBER Working Paper No. w4770, Available at SSRN: https://ssrn.com/abstract=1010455

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