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Labor Market Dynamics During the 2021-24 Inflation Surge

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  • Andres Blanco

Abstract

This paper revisits the common interpretation that the surge in the vacancy-tounemployment ratio during the 2021–24 inflation episode primarily reflected an overheated labor market. Instead, I argue that the increase in vacancies relative to unemployment was largely driven by falling real wages and a rise in job-to-job transitions, as workers sought to recover lost purchasing power, rather than by broad-based labor market overheating.

Suggested Citation

  • Andres Blanco, 2025. "Labor Market Dynamics During the 2021-24 Inflation Surge," Policy Hub, Federal Reserve Bank of Atlanta, vol. 2025(3), June.
    • Handle: RePEc:fip:a00068:101161
    DOI: 10.29338/ph2025-03
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    References listed on IDEAS

    as
    1. Hassan Afrouzi & Andrés Blanco & Andrés Drenik & Erik Hurst, 2024. "A Theory of How Workers Keep Up With Inflation," NBER Working Papers 33233, National Bureau of Economic Research, Inc.
    2. Jordi Galí, 2015. "Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework and Its Applications Second edition," Economics Books, Princeton University Press, edition 2, number 10495.
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    Keywords

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    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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