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Local unemployment and wages

Author

Listed:
  • Ch. GIANELLA

    (Insee)

Abstract

The purpose of this paper is to examine how the state of the local labour market influences pay, by estimating a Wage Curve for France. First it appears that individual wages are negatively correlated with regional unemployment rates, when taking into account individual characteristics. This feature is true for all categories of workers, for different measures of the local unemployment rate, and also for aggregate data. We find an elasticity of wages with respect to unemployment varying between 0.05 and 0.1, and show that permanent effects of the local unemployment on wages rate are stronger than transitory effects. Second we run estimations on cross section and find that the response of wages to unemployment has decreased over time. We try more flexible functional forms for the unemployment rate and it appears that the negative relationship between wages and unemployment is convex rather than linear. Finally, we do not find much autoregression in our wage equation (like Blanchflower and Oswald, 1994). It would mean that the levels and not the variations of wages are related to unemployment, contrary to a Phillips Curve specification.

Suggested Citation

  • Ch. GIANELLA, 2000. "Local unemployment and wages," Documents de Travail de l'Insee - INSEE Working Papers g2000-12, Institut National de la Statistique et des Etudes Economiques.
    • Handle: RePEc:nse:doctra:g2000-12
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    File URL: https://www.bnsp.insee.fr/ark:/12148/bc6p06zqr65/f1.pdf
    File Function: Document de travail de la DESE numéro G2000-12
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    Cited by:

    1. repec:spo:wpmain:info:hdl:2441/f4rshpf3v1umfa09lat214kj4 is not listed on IDEAS
    2. repec:hal:spmain:info:hdl:2441/f4rshpf3v1umfa09lat214kj4 is not listed on IDEAS
    3. David Spector, 2001. "Emploi : une analyse critique des politiques malthusiennes," Économie et Prévision, Programme National Persée, vol. 150(4), pages 13-31.
    4. repec:hal:wpspec:info:hdl:2441/f4rshpf3v1umfa09lat214kj4 is not listed on IDEAS
    5. Estevão, Marcello & Nargis, Nigar, 2005. "Structural Labor Market Changes in France," IZA Discussion Papers 1621, Institute of Labor Economics (IZA).
    6. repec:spo:wpecon:info:hdl:2441/f4rshpf3v1umfa09lat214kj4 is not listed on IDEAS

    More about this item

    Keywords

    Wage Curve; formation des salaires; taux de chômage régional;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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