Trade unions and wage inflation

Abstract

It was a traumatic discovery for many economists interested in the problem of inflation that the Phillips Curve quite suddenly appeared to lose its predictive capacity after 1966. Many clung on to the hope that what we were observing was simply a once-and-for-all parameter shift, connected with structural change in the labour market, and that a new trade-off relation would emerge when a suitable number of observations became available. Others, however, have sought different explanations.