The Variation in Wage Rigidity by Occupation and Union Status in the Us
| Published date | 01 February 1997 |
| Date | 01 February 1997 |
| Author | Carl M. Campbell III |
| DOI | http://doi.org/10.1111/1468-0084.00053 |
OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 59, 1 (1997)
0305-9049
THE VARIATION IN WAGE RIGIDITY
BY OCCUPATION AND UNION STATUS
IN THE US*
Carl M. Campbell III
I. INTRODUCTION
An important issue for macroeconomists is the behaviour of wages over
the business cycle. While previous studies have examined the cyclical
behaviour of aggregate or manufacturing wages in the US, relatively little
work has ben done to examine cyclical wage behaviour at a more disag-
gregated level. Examining differences in wage behaviour between groups
of workers may provide important insights into the causes of wage
rigidity. In addition, comparing the responsiveness of wages to economic
conditions may be of interest to policymakers. If certain groups of
workers have wages that are more responsive to economic conditions
than others, then the wage growth of these workers may serve as an
indicator of current labour market conditions and as a predictor of future
inflation.
This study estimates wage equations that are disaggregated by occupa-
tion and union status for the US. Data on wages disaggregated by occupa-
tion and union status have been recorded since 1975, so enough data are
now available to estimate wage equations with a reasonable degree of
accuracy. From these equations two measures of wage rigidity are
obtained: the effect of unemployment on wages and the speed with which
wages respond to price inflation. Thus, these wage equations allow us to
determine how the degree of wage rigidity varies across occupational
groups and between union and non-union workers.
Section II describes the form of the estimated wage equations, and
Section III presents the results of the regressions. Section IV concludes
and discusses the implications of the findings for theories of wage rigidity
and for the conduct of economic policy.
*I would like to thank Martin Asher, Takao Kato, and an anonymous referee for their
valuable comments on earlier versions of this paper.
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© Blackwell Publishers Ltd, 1997. Published by Blackwell Publishers, 108 Cowley Road, Oxford
OX4 1JF, UK & 350 Main Street, Malden, MA 02148, USA.
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