ABSTRACT
Wage inflexibility is frequently cited as one cause of the increases in unemployment after each of the two oil price shocks in the 1970s, and differences in the degree of wage flexibility across countries are re garded as a principal explanation for variations in economic perform ance across countries.1 The same consideration could also explain differences in sectoral performance within countries, although the empirical findings in the last section of this chapter do not support the hypothesis of an energy-price connection.
