Abstract
This paper reexamines the changes in wages, unemployment, and prices in the post-World War II period and considers the effects of unions on the relation between wages and unemployment. Using a simple, linear model to predict changes in wages from changes in unemployment rates, the author shows that quarterly data and observations are more desirable than annual data, that average hourly earnings are more reliable wage measures than wage rates, and that during the Korean War period the Wage Stabilization Program reduced the closeness of the relationship between wage changes and unemployment rates. Evidence based on a comparison of union wage rates and of average hourly earnings of nonunion and union workers indicates that, in response to unemployment changes, the wage behavior of union labor markets can be distinguished from the wage response of non-union markets. The speed of adjustment of the market to variations in unemployment is reduced and a more erratic pattern of wage responses to changes in unemployment is introduced, presumably through non-economic forces. (Author's abstract courtesy EBSCO.)
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