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How does monetary policy affect labor demand and labor productivity?

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  • Andrew Benito

    (Goldman Sachs, UK, and IZA, Germany)

Abstract

By supporting aggregate demand, including by easing financial constraints that affect businesses and house­holds, accommodative monetary policy increased employment during the 2008 financial crisis and its aftermath. But, monetary policies that ease financial pressures also reduce necessary restructuring that normally contributes to productivity growth. One reason why productivity growth has been weaker in the aftermath of the crisis is that aggressive monetary policy actions have weakened underlying supply-side performance and labor productivity.

Suggested Citation

  • Andrew Benito, 2017. "How does monetary policy affect labor demand and labor productivity?," IZA World of Labor, Institute of Labor Economics (IZA), pages 340-340, July.
    • Handle: RePEc:iza:izawol:journl:2017:n:340
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    References listed on IDEAS

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    More about this item

    Keywords

    monetary policy; labor demand; productivity;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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