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We examine the existence and stability of the wage curve, as hypothesized by Blanchflower and Oswald, using cross-sectional data from 3,106 U.S. counties. The data support the existence of an inverse relationship between wage levels and unemployment rates. The unemployment elasticity of pay ranges between -0.08 and -0.17, with an average of -0.13. This range is in line with Blanchflower and Oswald’s estimated value of -0.1.
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Deller et al. (1998) studied this question.
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