{"title":"The wage curve after the Great Recession","authors":"David Blanchflower, Alex Bryson, Jackson Spurling","doi":"10.1111/ecca.12515","DOIUrl":null,"url":null,"abstract":"<p>Most economists maintain that the labour market in the USA (and elsewhere) is ‘tight’ because unemployment rates are low, and the Beveridge curve (the vacancies-to-unemployment ratio) is high. They infer from this that there is potential for wage-push inflation. However, real wages fell rapidly in 2022, and prior to that, real wages had been stagnant for some time. We show that unemployment is <i>not</i> key to understanding wage formation in the USA, and has not been since the Great Recession. Instead, we show that rates of underemployment (the percentage of workers with part-time hours who would prefer more hours) and the rate of inactivity (the percentage of the civilian adult population who are out of the labour force) reduce wage pressure in the USA. This finding holds in panel data with state and year fixed effects in both annual and quarterly data for the period 1980–2022, and is supportive of a wage curve that fits the data much better than a Phillips curve. The unemployment rate no longer enters significantly negative in wage equations, however specified, in the years since 2008.</p>","PeriodicalId":48040,"journal":{"name":"Economica","volume":"91 362","pages":"653-668"},"PeriodicalIF":1.6000,"publicationDate":"2024-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/ecca.12515","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economica","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/ecca.12515","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Most economists maintain that the labour market in the USA (and elsewhere) is ‘tight’ because unemployment rates are low, and the Beveridge curve (the vacancies-to-unemployment ratio) is high. They infer from this that there is potential for wage-push inflation. However, real wages fell rapidly in 2022, and prior to that, real wages had been stagnant for some time. We show that unemployment is not key to understanding wage formation in the USA, and has not been since the Great Recession. Instead, we show that rates of underemployment (the percentage of workers with part-time hours who would prefer more hours) and the rate of inactivity (the percentage of the civilian adult population who are out of the labour force) reduce wage pressure in the USA. This finding holds in panel data with state and year fixed effects in both annual and quarterly data for the period 1980–2022, and is supportive of a wage curve that fits the data much better than a Phillips curve. The unemployment rate no longer enters significantly negative in wage equations, however specified, in the years since 2008.
期刊介绍:
Economica is an international journal devoted to research in all branches of economics. Theoretical and empirical articles are welcome from all parts of the international research community. Economica is a leading economics journal, appearing high in the published citation rankings. In addition to the main papers which make up each issue, there is an extensive review section, covering a wide range of recently published titles at all levels.