Wage curve versus Phillips curve: a microeconomic estimation for the Spanish case

Abstract

The aim of this paper is to test for the existence of a wage curve for the Spanish economy
between 1994 and 1996. The results confirm the negative relation between the level of nominal
wages and the unemployment rate in local labor markets. We also analyse whether
there is a relation between the local unemployment rate and wage changes, as the Phillips
curve describes, with disaggregated data, introducing the lagged dependent variable into
the specification and check the value of its coefficient. The results do not permit us to affirm
that there is evidence of a Phillips curve relation.

JEL Classification: J31, J60, J69.