The wage curve * effects of regional unemployment on the wage level

Abstract

"The 'wage curve' describes the effects of regional unemployment on the regional wage level. After extensive international comparative research, Blanchflower and Oswald postulated that a doubling of regional unemployment reduced the wage level by 10 per cent. In contrast to that, although a wage curve can be shown to exist within both eastern and western Germany, the effect of unemployment is smaller than expected. To substantiate the wage curve effect, several theoretical approaches are consulted, of which the efficiency wage approach seems to be the most promising one. In the empirical research, the distinction between long- and short-term effects is of importance as is the solving of a multi-level problem: regional unemployment affects the wage of individual workers. As regards the German labour market, there is a considerable number of empirical studies concerning many aspects of the fundamental relationship between unemployment and remuneration. Among other things, it is possible to assess the wage differential between eastern and western Germany." (Author's abstract, IAB-Doku) ((en))

Cite article

Blien, U. (2003): Die Lohnkurve. Auswirkungen der regionalen Arbeitslosigkeit auf das Lohnniveau. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Vol. 36, No. 4, p. 439-460.