Erling Barth

Dimensions of the Wage-Unemployment Relationship in the Nordic Countries: Wage Flexibility Without Wage Curves

This paper analyses wage formation in the Nordic countries at the regional level by the use of micro-data. Our results deviate systematically from the main conclusions drawn by Blanchflower and Oswald (1994). We find no stable negative relation between wages and unemployment across regions in the Nordic labor markets once regional fixed effects are accounted for. Wage formation at the regional level is characterized by considerable persistence, but unemployment exerts no immediate influence on wages at the regional level. There is no evidence of a wage curve, nor of a Phillips curve, at the regional level in the Nordic countries. The results are consistent with a theoretical model where central bargaining agents determine a national wage increment, and local bargaining agents determine wage drift.

Human Capital and Earnings in the Nordic Countries

Earnings differentials are commonly alleged to be notably smaller in the Nordic countries than in many other industrialized countries. Substantial differences in earnings dispersion across countries may have a number of consequences for the future role of the Nordic countries in an increasingly integrated world economy. A more compressed earnings distribution in the Nordic economies may affect both the pattern of immigration and the allocation of different production processes.