Document Type

Article

Abstract

This study develops an efficiency wage model that generates a wage curve at the regional level and a Phillips curve at the national level, under the assumption that workers' efficiency depends on both regional and aggregate labor market conditions. An equation relating wages to unemployment and lagged wages is derived from the profit-maximizing behavior of firms, and it is demonstrated that the coefficient on lagged wages is less than 1 with regional data but equals 1 with aggregate data. In addition, there is an equilibrium relationship between unemployment and wages at the regional level, but not at the aggregate level.

DOI

10.1016/j.labeco.2008.01.002

Publication Date

12-1-2008

Original Citation

“An Efficiency Wage Approach to Reconciling the Wage Curve and the Phillips Curve,” Labour Economics, Vol. 15, December 2008, pp. 1388-1415.

Legacy Department

Department of Economics

Language

eng

Publisher

Elsevier

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