May 2006

IZA DP No. 2138: The Wage Curve: An Entry Written for the New Palgrave, 2nd Edition

This paper summarizes evidence for the existence of a wage curve – a downward-sloping relationship between the level of pay and the local unemployment rate – in modern micro data. At the time of writing, the curve has been found in 40 nations. Its elasticity is approximately -0.1.