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From 1861 through 1957 A. W. H. Phillips conducted a study involving the inflation of wages and the unemployment rate. He concluded that the two were inversely related meaning that when the unemployment rate was high, the rate of wage inflation occurred more slowly, and when the unemployment rate was low, the rate of wage inflation rose more rapidly (Hoover, 2020). Phillips came to the conclusion that when the unemployment rate was lower, the labor market was tighter and that firms must raise wages more quickly to attract people from a smaller group of unemployed workers (Hoover, 2020). When the unemployment rate was higher, there were more people willing to work for less so firms did not have to raise wages as quickly. He created the Philips curve, which represented the average relationship between the behavior of wages and unemployment over a business cycle (Hoover, 2020).

Looking at a model and seeing what needs to be done to keep things balanced is one thing. However, the general population of unemployed workers don’t always go by that model, they go by what they see, so it takes time for the expectations of the workers to adjust to what is being offered to them. When the unemployment rate is low, there is less of a pool for companies to hire from so they have to raise the wages faster to catch the eye of the unemployed people. However, the unemployed people aren’t seeing this aspect of the hiring process, and all they see is that offers for them to work are getting higher. The workers are perceiving that there is an increase in real wages, and therefore they reduce the duration of their job search (Miller, 2016).

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Reply - Yes I agree with the model  W. H. Phillips giving the average relationship between the unemployement rate and wages of worker . However this is a general model which assume that if the unemployement rate is higher or lower it will have that or this influence on the wage of the worker like it will either decrease if unemployement rate increase or it will increase if unemployement rate decrease .But there can be other factor involve like the govt pollicy , technological chnages , business market model ongoing , role of entrepreneurship , etc whihc can affect this model and its ideal nature .

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