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The Wage Inflation Unemployment Curve at the Macroeconomic Level

Author

Listed:
  • Sophie Saglio

    (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis)

  • Antonia López-Villavicencio

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper tests the reduced form New Keynesian Wage Phillips Curve in several advanced countries for the 1985-2014 period. Based on this approach, we estimate wage rigidity at the aggregate level. We document that rigidity is heterogenous among our sample of countries: nominal wage rigidities are more important in the United States, while wage indexation is dominant in European Countries. We also present evidence that wage rigidity is not linked to the institutional environment at the macroeconomic level. Finally, we show that there is significant time variation in the estimated coefficients on the implied equation that is usually not taken into account in the theoretical literature.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Sophie Saglio & Antonia López-Villavicencio, 2017. "The Wage Inflation Unemployment Curve at the Macroeconomic Level," Post-Print halshs-01417937, HAL.
    • Handle: RePEc:hal:journl:halshs-01417937
    DOI: 10.1111/obes.12139
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    Cited by:

    1. Bank for International Settlements, 2023. "Inflation and labour markets," BIS Papers, Bank for International Settlements, number 142.
    2. Iwasaki, Yuto & Muto, Ichiro & Shintani, Mototsugu, 2021. "Missing wage inflation? Estimating the natural rate of unemployment in a nonlinear DSGE model," European Economic Review, Elsevier, vol. 132(C).
    3. De Schryder, Selien & Peersman, Gert & Wauters, Joris, 2020. "Wage indexation and the monetary policy regime," Journal of Macroeconomics, Elsevier, vol. 63(C).
    4. Patrizio Tirelli & Maria Ferrara, 2020. "Disinflation, Inequality, And Welfare In A Tank Model," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1297-1313, July.
    5. Clémence Berson & Edouard Jousselin, 2018. "Wage bargaining in Europe: a wide range of increasingly decentralised models since the crisis [Négociation salariale en Europe : des modèles différents, de plus en plus décentralisés depuis la cris," Bulletin de la Banque de France, Banque de France, issue 217.

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    More about this item

    Keywords

    wage rigidity; European Union; New keynesianWage Phillips Curve;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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