Wages and unemployment in the Nordic countries: Is there a connection?

The article explores the existence of a wage curve a la Blanchflower and Os wald in the Nordic countries. More specifically, the impact of unemployment rates on wages is analysed using large micro-level data sets. The results indicate that there exists a strong negative relationship between individua l wages and regional unemployment but only in the long run; the degree of w age flexibility is negligible in the short run. These findings conflict str ongly with those obtained for the UK and the US but are in line with result s obtained for Italy. The institutional settings in the labour market thus turn out to play a decisive role also in this respect.