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Federal Reserve Bank of San Francisco
FRBSF Economic Letter
Has the Wage Phillips Curve Gone Dormant?
Sylvain Leduc
Daniel J. Wilson
Abstract

Although the labor market has steadily strengthened, wage growth has remained slow in recent years. This raises the question of whether the wage Phillips curve—the traditional relationship between labor market slack and wage growth—has weakened. Estimating a causal link from slack to wage growth using national data is difficult. However, using city-level data over the past 25 years shows that the cross-city relationship has weakened since the Great Recession. Explanations consistent with this timing suggest that the Phillips curve may return to a steeper curve in the future.


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Sylvain Leduc & Daniel J. Wilson, "Has the Wage Phillips Curve Gone Dormant?" , Federal Reserve Bank of San Francisco, FRBSF Economic Letter, number 30, 2017.
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