A new GLO Discussion Paper finds a weak trade-off between aggregated national-level wage inflation and unemployment.
The Global Labor Organization (GLO) is an independent, non-partisan and non-governmental organization that functions as an international network and virtual platform to stimulate global research, debate and collaboration.
GLO Discussion Paper No. 503, 2020
Wage Setting and Unemployment: Evidence from Online Job Vacancy Data – Download PDF
by Faryna, Oleksandr & Pham, Tho & Talavera, Oleksandr & Tsapin, Andriy
GLO Fellow Oleksandr Talavera
Author Abstract: This paper examines the relationship between labour market conditions and wage dynamics by exploiting a unique dataset of 0.8 million online job vacancies. We find a weak trade-off between aggregated national-level wage inflation and unemployment. This link becomes more evident when wage inflation is disaggregated at sectoral and occupational levels. Using exogenous variations in local market unemployment as the main identification strategy, a negative correlation between vacancy-level wage and unemployment is also established. The correlation magnitude, however, is different across regions and skill segments. Our findings suggest the importance of micro data’s unique dimensions in examining wage setting – unemployment relationship.
GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS, EconPapers). Complete list of all GLO DPs – downloadable for free.