Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/336494 
Year of Publication: 
2026
Series/Report no.: 
Sveriges Riksbank Working Paper Series No. 459
Publisher: 
Sveriges Riksbank, Stockholm
Abstract: 
We document a substantial reduction in the wage responsiveness to regional unemployment (the wage curve) in Sweden during the past 25 years. The period is characterized by large changes in the composition of the labor force arising from refugee migration and active labor supply policies targeting marginal workers. During the period, the relationship between regional unemployment and industry demand shocks weakened as the share of immigrants among the unemployed increased from 25 to 60 percent. Simultaneously, a previously stable wage curve disappeared, even though regional wages continued to respond to regional industry demand shocks. The results suggest that wages respond more strongly to unemployment fluctuations that arise from the demand side than the supply side, and that the unemployment rate has become a less informative indicator of resource utilization and inflationary pressure.
Subjects: 
Wages
Unemployment
Composition
JEL: 
J11
E24
J21
J31
R23
Document Type: 
Working Paper

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