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A New Indicator of Common Wage Inflation

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  • HIE JOO AHN
  • HAN CHEN
  • MICHAEL KISTER

Abstract

We develop a new indicator of common wage inflation (CWI) by extracting and aggregating the common components from detailed industry‐level nominal wage data. We show that the CWI is better aligned with the unemployment rate gap for the post‐Great Recession period than are other indicators of wage inflation. The CWI indicates a tighter economy than popularly cited wage measures during the expansion after the Great Recession, and the industry‐specific factors largely account for the subdued wage growth despite the continued tightening in the labor market.

Suggested Citation

  • Hie Joo Ahn & Han Chen & Michael Kister, 2026. "A New Indicator of Common Wage Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 58(3), pages 763-786, April.
    • Handle: RePEc:wly:jmoncb:v:58:y:2026:i:3:p:763-786
    DOI: 10.1111/jmcb.13217
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    References listed on IDEAS

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