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The wage curve within and across regions: new insights from a pairwise view of US states

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  • Mark J. Holmes

    (University of Waikato)

  • Jesús Otero

    (Universidad del Rosario)

Abstract

The novel application of a pairwise autoregressive distributed lag (ARDL) approach provides new insights into the regional wage–unemployment rate relationship. Using this approach, the short- and long-run wage curve slope for each US state is potentially inversely related to the unemployment rate in all other states. In terms of the oft-cited Blanchflower and Oswald elasticity, there is mixed evidence in support of a $$-\,0.1$$ - 0.1 wage curve slope. We find that the pairwise wage curve slope is driven by factors that include state-level home-ownership and education attainment. Our findings suggest that short-run wage flexibility decreased during the period following the Great Recession.

Suggested Citation

  • Mark J. Holmes & Jesús Otero, 2022. "The wage curve within and across regions: new insights from a pairwise view of US states," Empirical Economics, Springer, vol. 62(5), pages 2069-2089, May.
    • Handle: RePEc:spr:empeco:v:62:y:2022:i:5:d:10.1007_s00181-021-02097-1
    DOI: 10.1007/s00181-021-02097-1
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    1. David Blanchflower & Alex Bryson & Jackson Spurling, 2024. "The wage curve after the Great Recession," Economica, London School of Economics and Political Science, vol. 91(362), pages 653-668, April.

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