Abstract

In 1994, Blanchflower & Oswald claimed to have found an "empirical law of economics" the wage curve, which describes the wage level as a downward-sloping convex curve of the regional unemployment rate. According to their empirical results, the elasticity of wages with respect to regional unemployment is -0.1. This holds especially for the Anglo-Saxon countries. In this project the Western German wage curve is reconsidered using modern econometric techniques. Among others it is planned to take spatial autocorrelation into account.