The Wage Curve: The Lessons of an Estimation over a Panel of Countries
This paper gives a systematic comparison of private wage behavior in industrialized countries. A wage curve with nominal rigidities is estimated on a panel of 16 countries according to a specific method based on GMM and factor analysis. First, we show that the employment rate is a better indicator of labor market tensions than the unemployment rate. Second, the main difference across countries is the reaction of the wage rate to changes in productivity and in the employment rate. Third, we find evidence of some nominal rigidity in wage behavior and of a positive but small effect of the wedge.
International comparison; labor market; wage flexibility
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