Earning Curves and Wage Curves

Using British county data for full-time male manual workers we extend earlier work to investigate wage and earning curves. We distinguish between total earnings and hourly wages for standard hours, uncontaminated by overtime premium. Using data from 1980–1995 we find that earnings behaviour is dominated by volatile hours in the short run, while wage growth is highly sensitive to the level of unemployment as in the classical Phillips curve with macro data. Macro evidence for sticky wages is thus confirmed at the local level, and the wage curve of rapid adjustment is rejected for normal hourly wages.