Cover IMF Working Papers
Monetary Policy Under Labor Market Power
Author:
Anastasia Burya
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,
Rui Mano
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Mr. Yannick Timmer
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Miss Anke Weber
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 128
Language:
English
Publication Date:
01 Jul 2022
DOI:
https://doi.org/10.5089/9798400211812.001
ISBN:
9798400211812
ISSN:
1018-5941
Pages:
46
Keywords:
Labor market power; Monetary Policy; Vacancies; Wages; vacancy posting; wage Phillips curve; technology skill; monetary policy shock; Labor markets; Labor demand; Labor share; Unemployment rate; Global; labor demand effects of monetary policy; Employment
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Using the near universe of online vacancy postings in the U.S., we study the interaction between labor market power and monetary policy. We show empirically that labor market power amplifies the labor demand effects of monetary policy, while not disproportionately affecting wage growth. A search and matching model in which firms can attract workers by either offering higher wages or posting more vacancies can rationalize these findings. We also find that vacancy postings that do not require a college degree or technology skills are more responsive to monetary policy, especially when firms have labor market power. Our results help explain the “wageless” recovery after the 2008 financial crisis and the flattening of the wage Phillips curve, especially for the low-skilled, who saw stagnant wages but a robust decline in unemployment.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 128