Has Globalization Changed the Phillips Curve?
Externally reviewed
Industry-Level Evidence on the Effect of the Unemployment Gap on Wages
Study Paper No. 23

Written by: Claus Aastrup Jensen
It has recently been argued that the flattening of the Phillips curve, observed in many industrial countries over the last two decades, is due to globalization. However, so far only a very limited number of studies in the existing literature have managed to analyze the effect of globalization on the Phillips curve directly, and none of these are using industry-level data. In the present paper, Claus Aastrup Jensen estimates industry-specific Phillips curves for Denmark to test whether the finding of a weaker link between wages and the unemployment gap is due to changes within industries or should instead be ascribed to changes in the relative sizes of industries. In addition to this, he tests how far globalization through a variety of channels influences the slope of the Phillips curve. Based on input-output tables and linked employer-employee data, the author finds that the decline of the sensitivity of wages to the unemployment gap is caused almost entirely by changes in the slopes of industry-specific Phillips curves. Furthermore, that industries with an easier access to international outsourcing show weaker wage responses to the unemployment gap, whereas access to import of foreign final goods and foreign labour seem to have no effect on the slope of the Phillips curve.
Related publications

Knowledge overview
Opening the Danish labour market to citizens of Eastern Europe has been a success
Go to knowledge overview
Research report
Emigration of Immigrants – A Duration Analysis
Go to research report
Research report
What Happens to the Employment of Native Co-Workers when Immigrants are Hired?
Go to research report
Research report
Immigrants at the Workplace and the Wages of Native Workers
Go to research reportLatest releases on the same welfare topic

Research
Podcast
Language requirements for immigrants affect educational pathways and employment
September 2023

Research
Research report
Globalisation and the Gender Gap in Mental Well-being
September 2023

Research
Knowledge overview
Irregular working hours affect women’s mental health
September 2023

Research
Book
Change in the Labour Market – Globalisation, Automation and Education
September 2023