Which curve shows an inverse relationship between unemployment and wage inflation?

The Phillips curve shows an inverse relationship between unemployment and wage inflation.

New Zealand economist A. W. Phillips identified this pattern in a 1958 study of the United Kingdom from 1861 to 1957. He found that money wages tended to rise faster when unemployment was low and more slowly when unemployment was high. Tight labor markets give workers greater bargaining power, while abundant unemployed labor weakens pressure for wage increases.

Paul Samuelson and Robert Solow later popularized the related interpretation linking unemployment with price inflation. The original curve concerned wage growth, not directly the general price level. That distinction is a common source of confusion.

The relationship is mainly treated as a short-run trade-off today. Milton Friedman and Edmund Phelps argued in the 1960s that expected inflation shifts the short-run curve. In the long run, the expectations-augmented Phillips curve is generally depicted as vertical: attempts to hold unemployment below its natural rate may produce accelerating inflation rather than permanently lower unemployment. The 1970s combination of high inflation and high unemployment challenged the idea of a stable permanent trade-off.