A macroeconomic analysis of the impact of union wage increases on nonunion wages

Abstract

Based on the augmented Phillips curve and the autoregressive conditional heteroscedasticity model, the author finds that the growth of nonunion wages are positively associated with expected inflation, productivity growth, and the growth of union wages and are negatively correlated with the unemployment rate. The partial adjustment process is confirmed. Error variance can best be modelled by the ARCH(2) process.