New evidence on the dynamic wage curve for Western Germany: 1980-2004

Badi H. Baltagi, Uwe Blien, Katja Wolf

Research output: Contribution to journalArticle

18 Scopus citations

Abstract

Blanchflower and Oswald [Blanchflower, David G. and Oswald, Andrew J., 1994a, The Wage Curve, (Cambridge, MA, MIT Press), Blanchflower, David G. and Oswald, Andrew J., 1994b, Estimating a Wage Curve for Britain 1973-90, The Economic Journal 104, 1025-1043. Eine praktische Einführung, Nürnberg] reported that they have found an 'empirical law of economics' - the Wage Curve. Our paper reconsiders the western German Wage Curve using disaggregated regional data and is based on almost one million employees drawn from the Federal Employment Services of Germany over the period 1980-2004. We find that the wage equation is highly autoregressive but far from unit root. The unemployment elasticity is significant but relatively small: only between - 0.02 and - 0.04. We also check the sensitivity of this elasticity for different population groups (young versus old, men versus women, less educated versus highly educated, German native versus foreigner), confirming that it is stronger the weaker the bargaining power of the particular group.

Original languageEnglish (US)
Pages (from-to)47-51
Number of pages5
JournalLabour Economics
Volume16
Issue number1
DOIs
StatePublished - Jan 2009

Keywords

  • Panel data
  • Phillips curve
  • Regional labour markets
  • Wage Curve

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

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