AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
The Wage Phillips Curve under Labor Market Power
AEA Papers and Proceedings
vol. 113,
May 2023
(pp. 110–13)
Abstract
Using the near universe of online vacancy postings in the United States, we explore linkages between labor market power and the trade-off between unemployment and wages. We estimate the Phillips curve at the commuting zone level and find that the relationship between unemployment and wage inflation is weak in regions with high labor market power. These results help explain the flattening of the wage Phillips curve following the global financial crisis. In the context of rising interest rates, unemployment is likely to rise more in poorer US regions because labor market power is more prevalent there, thus leading to rising inequality.Citation
Burya, Anastasia, Rui Mano, Yannick Timmer, and Anke Weber. 2023. "The Wage Phillips Curve under Labor Market Power." AEA Papers and Proceedings, 113: 110–13. DOI: 10.1257/pandp.20231007Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E31 Price Level; Inflation; Deflation
- E52 Monetary Policy
- J23 Labor Demand
- J31 Wage Level and Structure; Wage Differentials
- J63 Labor Turnover; Vacancies; Layoffs
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics