"Wage Curve, Unemployment Duration, and Compensating Differentials"
, in Labour Economics, Vol. 3, Nummer 4, 12-1996
Wage Curve, Unemployment Duration, and Compensating Differentials
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In this study unemployment effects on individual pay are investigated following the study on 'wage curves' by Blanchflower and Oswald (1990). In bargaining models, higher unemployment should lower wage pressure; due to compensating wage differential arguments, on the other hand, workers who take jobs with higher layoff risks should be rewarded. In a cross-sectional study on Austrian data, a negative wage curve is confirmed. Contrary to the results by Blanchflower and Oswald no U-shape is found, also long-term unemployment seems to be important. No conclusive evidence of compensating differentials has been determined.