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CEP discussion paper

Wage Equations, Wage Curves and All That

This paper is concerned with the relationship between wages and unemployment. Using UK regions and individuals as the basis for our analysis, the following questions are investigated. First, is the wage equation a relationship between unemployment and wages or wage changes? Second, can we identify the relationship completely by looking at regional wages and regional unemployment or do regional wages depend on aggregate unemployment as well? Third, are wages influenced only by the current state of the labour market or do contracts lead to wages depending on labour market conditions in the last boom or upon entry into the job? Finally is the wage-unemployment relationship influenced by inflation, competition or the housing market?

Brian Bell, Stephen Nickell and Glenda Quintini

September 2000     Paper Number CEPDP0472

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