Inflation Adjustment and Labour Market Structures: Evidence from a Multi-Country Study
AbstractAn empirical analysis of the impact of labour market structures on the response of inflation to macroeconomic shocks is presented. Results based on a 20 country panel show that if labour market coordination is high, the effect on inflation of movements in unemployment, import prices, tax rates and productivity is dampened, both on impact and dynamically. In contrast, monopoly power in labour supply, measured by the percentage unionisation of the workforce, appears to amplify the response of inflation to its reduced form determinants. These findings are attributed to the behaviour of wages following movements in demand- and supply-side conditions.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1510.
Length: 27 pages
Date of creation: Mar 2005
Date of revision:
Publication status: published in: Scandinavian Journal of Economics, 2007, 109 (3), 619-642
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Other versions of this item:
- Christopher Bowdler & Luca Nunziata, 2007. "Inflation Adjustment and Labour Market Structures: Evidence from a Multi-country Study," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(3), pages 619-642, 09.
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-03-13 (All new papers)
- NEP-CBA-2005-03-13 (Central Banking)
- NEP-MAC-2005-03-13 (Macroeconomics)
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