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Long-term unemployment and US State wages

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  • Mark Partridge
  • Dan Rickman

Abstract

During the 1980s, rising European unemployment without rapidly subsiding wage pressure challenged conventional labour market theories. One explanation is that a greater proportion of unemployment that is long-term unemployment (LTU) reduces downward wage pressure. Empirical evidence regarding this proposition is mixed, where it is possible the relationship varies across countries. Hence, this study examines the LTU-wage relationship for the US using 1976-91 state-level data. The results suggest that a greater LTU proportion is positively related to wages, but the result should be interpreted cautiously. Thus, US labour markets may be 'tighter' than previously suspected.

Suggested Citation

  • Mark Partridge & Dan Rickman, 1997. "Long-term unemployment and US State wages," Applied Economics Letters, Taylor & Francis Journals, vol. 4(8), pages 465-468.
    • Handle: RePEc:taf:apeclt:v:4:y:1997:i:8:p:465-468
    DOI: 10.1080/758536626
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    References listed on IDEAS

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    1. D. H. Blackaby & D. N. Manning, 1990. "The North‐South Divide: Earnings, Unemployment And Cost Of Living Differences In Great Britain," Papers in Regional Science, Wiley Blackwell, vol. 69(1), pages 43-55, January.
    2. Blackaby, D H & Manning, D N, 1990. "The North-South Divide: Questions of Existence and Stability?," Economic Journal, Royal Economic Society, vol. 100(401), pages 510-527, June.
    3. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-338, May.
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    Cited by:

    1. Partridge, Mark D. & Dalenberg, Douglas R., 2000. "An empirical analysis of state labor markets: has worker insecurity shifted wages in the 1990s?," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(3), pages 303-323.

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