Discuss the difference between the Blanchflower-Oswald wage curve and the Phillips curve.

Expert Solution

Blanchflower-Oswald wage curve

The Blanchflower-Oswald wage curve is the negative relationship between the levels of unemployment and wages that arises when these variables are expressed in local terms. According to conventional labor economics and regional economics, an area's wage is positively related to the amount of joblessness in the area but Blanchflower and Oswald argue that the stable relationship is a downward-sloping convex curve linking local unemployment and the level of pay.

Phillips curve

The Phillips curve is an economic concept developed by A. W. Phillips stating that inflation and unemployment have a stable and inverse relationship. The theory claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment.

The Phillips curve states that inflation and unemployment have an inverse relationship. Higher inflation is related with lower unemployment and vice versa. The Phillips curve was a concept used to guide macroeconomic policy in the 20th century, but was questioned by the crisis of the 1970's

Rahul Sunny answered 2 years ago

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