Dr. Dania Evelyn
The Philips curve examines the relationship between the rate of unemployment and the rate of money wage changes. The British economist, Philips who first identified it, expressed an inverse relationship between the rate of unemployment and the rate of increase in money wages. His data analysis was based on United kingdom where Phillips derived the empirical relationship that when unemployment is high, the rate of increase in money wage rates is low. This is because workers are unwilling to offer their services at less than the prevailing rates when the demand for labour is low, unemployment is high so that wage rates fall very slowly. On the other hand, when unemployment is low, the rate of increase in money wage rates is high.
ECN328 - Public Sector Economics - Lecture 4
DR. (MRS) DANIA EVELYN NDIDI
Management And Social Sciences
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