Fear, Unemployment and Pay Flexibility

31 Pages Posted: 11 Sep 2007 Last revised: 12 Sep 2022

See all articles by David G. Blanchflower

David G. Blanchflower

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER); University of Stirling - Department of Economics

Date Written: May 1990

Abstract

The paper uses newly available cross-section data to study wage determination in the United Kingdom in the 1980s. The results are contrasted with those from a comparable sample from the US from 1977-1988. 1) Fear of unemployment substantially depresses pay in both countries.2) There is some evidence of a wage ratchet in the UK whereby rates of pay are more flexible upwards than downwards.3) The unemployment elasticity of pay averages -0.1 in the UK and apparently zero in the US.4) Wages are almost twice as flexible in non-union and small workplaces in the UK.

Suggested Citation

Blanchflower, David G., Fear, Unemployment and Pay Flexibility (May 1990). NBER Working Paper No. w3365, Available at SSRN: https://ssrn.com/abstract=1010430

David G. Blanchflower (Contact Author)

Dartmouth College - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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University of Stirling - Department of Economics ( email )

Stirling, FK9 4LA
United Kingdom

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