Similarly, with this specification there might be constancy, and of course there might be not. And as said, constancy might not be the real issue, as small fluctuations in a stable range might be acceptable too. [91]
Selection of f[u]
In the selection of f[u] we have to take account of the fact that u can shift as a result of the minimum wage. Workers below the minimum wage are not relevant for the labour market, and do not exert a downward pressure on wage inflation. Above we saw that u = un + um. Let fu[un] give the fundamental nonshifted relationship for that part of unemployment that still affects the development of wages. Conforming to empirical regularity:
fu[un] =
-
Log[un +
]