A. W. Phillips first described the inverse relationship between unemployment and wage inflation in the Phillips curve.
New Zealand-born economist Alban William Phillips published his landmark study in 1958. Using data from the United Kingdom between 1861 and 1957, he found an inverse relationship between unemployment and the rate at which wages changed. His graph became known as the Phillips curve.
The original work concerned wage inflation rather than the consumer-price inflation measures commonly discussed today. Later economists adapted the idea to describe a short-run relationship between unemployment and price inflation. The model suggested that lower unemployment could be associated with faster inflation under certain conditions.
The 1970s complicated the simple version of the theory because many countries experienced high inflation and high unemployment simultaneously. Milton Friedman and Edmund Phelps argued that expectations mattered and that there was no permanent trade-off in the long run. Modern economists therefore use several versions of the Phillips curve rather than treating it as a fixed rule.