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The Wage Curve Reconsidered: Is It Truly An 'Empirical Law Of Economics'?

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  • Bernard FINGLETON

    (Department of Land Economy, University of Cambridge)

  • Silvia PALOMBI

    (Department of Economics, University of Strathclyde)

Abstract

The negative relationship between wages and unemployment, embodied within the so-called wage curve, has an extensive literature and has been referred to as ‘an empirical law of economics’. However there are newer alternative theories that seek to explain the variation in wages without reference to unemployment rates, namely Urban Economics (UE) and New Economic Geography (NEG). The present paper considers the relative success of non-nested models of wage determination from the perspective of Great Britain’s 408 local authorities over the period 1998-2010.

Suggested Citation

  • Bernard FINGLETON & Silvia PALOMBI, 2013. "The Wage Curve Reconsidered: Is It Truly An 'Empirical Law Of Economics'?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 38, pages 49-92.
    • Handle: RePEc:tou:journl:v:38:y:2013:p:49-92
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    Cited by:

    1. Ana Maria Bonomi Barufi & Eduardo A. Haddad, Peter Nijkamp, 2016. "New evidence on the wage curve: non-linearities, urban size, and spatial scale in Brazil," Working Papers, Department of Economics 2016_39, University of São Paulo (FEA-USP).
    2. Kosfeld, Reinhold & Dreger, Christian, 2019. "Towards an East German wage curve - NUTS boundaries, labour market regions and unemployment spillovers," Regional Science and Urban Economics, Elsevier, vol. 76(C), pages 115-124.
    3. Baltagi, Badi H. & Rokicki, Bartlomiej, 2014. "The spatial Polish wage curve with gender effects: Evidence from the Polish Labor Survey," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 36-47.
    4. Rokicki, Bartlomiej & Blien, Uwe & Hewings, Geoffrey J.D. & thi Hong Van, Phan, 2021. "Is there a wage curve with regional real wages? An analysis for the US and Poland," Economic Modelling, Elsevier, vol. 102(C).
    5. Reinhold Kosfeld & Christian Dreger, 2018. "Local and spatial cointegration in the wage curve – a spatial panel analysis for german regions," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 38(1), pages 53-75, February.
    6. Haci Mevlut Karatas, 2017. "The Turkish Spatial Wage Curve," Econometrics, MDPI, vol. 5(3), pages 1-21, August.
    7. Guilherme Cemin Paula & André M. Marques, 2022. "Brazilian Wage Curve: Further Evidence Based on Spatial Interactions in Times of Recession, 2012–2019," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 65(3), pages 689-708, September.
    8. Ana Barufi & Eduardo Haddad & Peter Nijkamp, 2016. "A comprehensive analysis of the wage curve in Brazil: Non-linearities, urban size, and the spatial dimension," ERSA conference papers ersa16p279, European Regional Science Association.
    9. Bruna, Fernando, 2024. "Market Potential, panel data, and aggregate fluctuations: All that glitters is not gold," MPRA Paper 121949, University Library of Munich, Germany.

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    More about this item

    Keywords

    WAGE CURVE; EMPLOYMENT DENSITY; MARKET POTENTIAL; SPATIAL PANEL DATA ECONOMETRICS; NON-NESTED MODELS; SPATIAL J-TEST;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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