A European type wage equation from an American type labour market : some evidence from a panel of Norwegian manufacturing industries in the 1930s

Abstract

Using a newly constructed panel of manufacturing industry data for interwar Norway, we estimate a long-run wage curve for the 1930s that has all the modern features of being homogeneous in prices, proportional to productivity, and having an unemployment elasticity of -0.1. This result is more typical of contemporary European than U.S. wage equations, even if the labour market in interwar Norway possessed distinctively more American type features than those associated with present-day European welfare states. We also present some new Monte Carlo evidence on the properties of the estimators used.