Premium
Real Wages and Unemployment in Local Labor Markets: Pennsylvania MSAs, 1975‐86
Author(s) -
HYCLAK THOMAS
Publication year - 1988
Publication title -
growth and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.657
H-Index - 55
eISSN - 1468-2257
pISSN - 0017-4815
DOI - 10.1111/j.1468-2257.1988.tb00474.x
Subject(s) - economics , unemployment , wage , real wages , labour economics , efficiency wage , econometrics , macroeconomics
This paper specifies an unemployment rate model with relatively long lags on the manufacturing real wage and the level of real GNP as the independent variables. Estimates of the model for 12 MSAs in Pennsylvania over the period from 1975:2 to 1986:4 generally indicate a fairly strong positive unemployment response to lagged real wages. This is consistent with theoretical models of the labor market that hypothesize strong real wage effects during periods of aggregate supply shocks. The unique characteristics of the time period under study and the disaggregation to local labor markets might account for the fact that, in contrast to many previous empirical studies, we are able to uncover evidence of a positive real wage‐unemployment relationship in U.S. time series data.