The impact of unemployment on wage formation

Abstract

"A wage curve describes regional wages as a decreasing function of the unemployment rate. Its theory is based on efficiency wage and on bargaining models. In the paper the Shapiro/Stiglitz model is used to derive the wage curve. In the empirical part of the study a multilevel linear model with radom coefficients is applied to estimate a wage curve. The analysis with data for western Germany shows that the regional unemployment rate effects the regional ware. On the level of districts the elasticity is -0.043. The relationship is nonlinear. This wage curve is similar to those of other countries, but it is flatter." (Author's abstract, IAB-Doku) ((en))

Cite article

Blien, U. (1995): The impact of unemployment on wage formation. Estimating wage curves for Western Germany with multilevel linear models. In: K. Gerlach & R. Schettkat (Hrsg.) (1995): Determinanten der Lohnbildung. Theoretische und empirische Untersuchungen (Sozialwissenschaftliche Arbeitsmarktforschung. N.F., 03), p. 117-141.