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The wage curve: convexity, kinks and composition effects

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  • Kare Johansen

Abstract

A detailed analysis is provided of the shape of the wage curve using annual time series for Norwegian manufacturing. The main results are summarized as follows. Unemployment affects wages significantly, and we provide evidence in favour of a monotonically decreasing but highly non-linear wage curve. The long-term unemployed exert less of a wage dampening effect than do recently laid off workers, and real wage responsiveness to unemployment seems also to be stronger with higher inflation.

Suggested Citation

  • Kare Johansen, 1997. "The wage curve: convexity, kinks and composition effects," Applied Economics, Taylor & Francis Journals, vol. 29(1), pages 71-78.
    • Handle: RePEc:taf:applec:v:29:y:1997:i:1:p:71-78
    DOI: 10.1080/000368497327416
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    References listed on IDEAS

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    1. Calmfors, Lars, 1993. "Lessons from the macroeconomic experience of Sweden," European Journal of Political Economy, Elsevier, vol. 9(1), pages 25-72, March.
    2. Holden, S., 1991. "Economic Policy in an Economy with Local and Central Wage Bargaining," Memorandum 1991_008, Oslo University, Department of Economics.
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    1. AlbÆk, Karsten & Asplund, Rita & Blomskog, Stig & Barth, Erling & GuÐmundsson, Björn Runar & Karlsson, Vifill & Madsen, Erik, 2002. "Dimensions of the Wage-dimensions Relationship in the Nordic Countries: Wage Flexibility without Wage Curves," Discussion Papers 698, The Research Institute of the Finnish Economy.
    2. Roger Bjørnstad & Ragnar Nymoen, 1999. "Wage and Profitability: Norwegian Manufacturing 1967-1998," Discussion Papers 259, Statistics Norway, Research Department.
    3. Albaek, K. & Asplund, R. & Blomskog, S. & Barth, E. & Guomundsson,B.R. & Karlsson, V. & Madsen, E.S., 1999. "Domensions of the Wage-Unemployment Relationship in the Nordic Countries: Wage Flexibility without Wage Curves," Papers 99-24, Carleton - School of Public Administration.
    4. Peter Nijkamp & Jacques Poot, 2005. "The Last Word on the Wage Curve?," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 421-450, July.
    5. Kåre Johansen & Ørjan Mydland & Bjarne Strøm, 2007. "Politics in wage setting: does government colour matter?," Economics of Governance, Springer, vol. 8(2), pages 95-109, February.
    6. David G. Blanchflower & Andrew J. Oswald, 2005. "The Wage Curve Reloaded," NBER Working Papers 11338, National Bureau of Economic Research, Inc.
    7. Kåre Johansen, 2002. "Regional Wage Curves Empirical Evidence from Norway," Working Paper Series 0302, Department of Economics, Norwegian University of Science and Technology.
    8. Longhi, Simonetta & Nijkamp, Peter & Reggiani, Aura & Blien, Uwe, 2002. "Forecasting regional labour markets in Germany: an evaluation of the performance of neural network analysis," ERSA conference papers ersa02p117, European Regional Science Association.

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