We find the Phillips-type model performs well in explaining wage adjustment for US non-farm business, US manufacturing, and NY manufacturing sector, showing a typical adjustment to price inflation expectation and labor market tightness. While the basic wage model shows evidence of a structural shift for the post-1991 period, this is not evident in the adjusted models for both US non-farm business and NY manufacturing, implying that the observed structural shift for the post-1991 period is likely to be the result of model mis-, or under-specification. The effect of the fraction of unemployment due to permanent job loss on wage inflation appears to be manufacturing-specific, while a smaller adjustment to price inflation expectation appears to be state-specific. On the other hand, the significant effect of the percent of adults unemployed appears to be a national phenomenon.
Jonathan Ohm, John Okpara and Martina Vidovic. "The Slope of the U.S. Nominal Treasury Yield Curve Unemployment and Stability of Wage Determination: United States versus New York State." New York Economic Review. vol. 41, Fall 2010, p. 3-13
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