The determinants of wage dynamics in France: macro and sectoral approaches using the Phillips curve

This study analyses the evolution of the Phillips curve, i.e. the negative relationship between nominal wage growth and unemployment. Using quarterly estimates between 1975 and 2018 in France, this study shows that the Phillips curve still exists in the decade following the 2008-2009 crisis, even though it has flattened over time. Past inflation is no longer a significant determinant of wages after the 1992-1993 crisis. Wage dynamics is more driven by past aggregate consumer price inflation than by past sectoral value added price inflation. The study also decomposes the coefficients at the sectoral level, to highlight any divergences between industry and services. Apart from productivity, which significantly affects wages only in services, the other variables do not have sectorally differentiated effects.