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Post-Pandemic Labor Shortages Have Limited the Effect of Monetary Policy on the Labor Market

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Abstract

The labor market has so far shown remarkable resilience to the Federal Reserve’s recent monetary policy tightening. Severe labor shortages in the post-pandemic era have led many employers to hold on to workers and hire less-skilled workers—even though they expect demand for their goods or services to weaken in the future. As a result, unemployment remains low, and labor productivity has declined.

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  • Elior Cohen, 2023. "Post-Pandemic Labor Shortages Have Limited the Effect of Monetary Policy on the Labor Market," Economic Bulletin, Federal Reserve Bank of Kansas City, pages 1-4, September.
    • Handle: RePEc:fip:fedkeb:96953
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    File URL: https://www.kansascityfed.org/Economic%20Bulletin/documents/9801/EconomicBulletin23Cohen0922.pdf
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    References listed on IDEAS

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    1. Bernanke, Ben S & Blinder, Alan S, 1992. "The Federal Funds Rate and the Channels of Monetary Transmission," American Economic Review, American Economic Association, vol. 82(4), pages 901-921, September.
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    1. Barone, Simona & Oggero, Noemi & Damilano, Marina, 2025. "Monetary policy and financial stability: Evidence from a new macroeconomic environment☆," Research in International Business and Finance, Elsevier, vol. 77(PB).

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