www.svt.ntnu.no/iso/wp/wp.htm Regional Wage Curves Empirical Evidence from Norway∗

The papers studies wage formation using panel data for a large sample of Norwegian municipalities covering the time period 1970— 1992. The main conclusions are the following. Regional manufactur-ing wages are negatively related to regional unemployment, but the effects of open as well as total regional unemployment are small. We find a numerically important wage dampening effect of labour market programs. However, we can not reject the null that only total unem-ployment matters. Finally, manufacturing profitability is important in shaping regional manufacturing wages and reduced regional payroll taxes are almost fully transmitted into reduced regional wage costs