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The disparate labor market impacts of monetary policy

Author

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  • Seth B. Carpenter

    (Board of Governors of the Federal Reserve System)

  • William M. Rodgers III

Abstract

Employing two widely used approaches to identify the effects of monetary policy, this paper explores the differential impact of policy on the labor market outcomes of teenagers, minorities, out-of-school youth, and less-skilled individuals. Evidence from recursive vector autoregressions and autoregressive distributed lag models that use information on the Federal Reserve's contractionary initiatives indicate that the employment-population ratio of minorities is more sensitive to contractionary monetary policy than that of whites. The ratio falls primarily because of an increase in unemployment and not because of a decline in labor force participation. Monetary policy appears to have a disproportionate effect on the unemployment rate of teenagers, particularly African American teenagers. Their employment-population ratios fall because of increased difficulty in obtaining employment. The larger responses are not caused by their higher likelihood of having been employed in industries and occupations that are more sensitive to contractionary monetary policy. © 2004 by the Association for Public Policy Analysis and Management.

Suggested Citation

  • Seth B. Carpenter & William M. Rodgers III, 2004. "The disparate labor market impacts of monetary policy," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(4), pages 813-830.
  • Handle: RePEc:wly:jpamgt:v:23:y:2004:i:4:p:813-830
    DOI: 10.1002/pam.20048
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    File URL: http://hdl.handle.net/10.1002/pam.20048
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    References listed on IDEAS

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    1. Christiano, Lawrence J. & Eichenbaum, Martin & Evans, Charles L., 1999. "Monetary policy shocks: What have we learned and to what end?," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 2, pages 65-148 Elsevier.
    2. Thorbecke, Willem, 2001. "Estimating the effects of disinflationary monetary policy on minorities," Journal of Policy Modeling, Elsevier, vol. 23(1), pages 51-66, January.
    3. Ben S. Bernanke & Ilian Mihov, 1998. "Measuring Monetary Policy," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 869-902.
    4. Vivek Moorthy, 1988. "On demographic adjustments to estimates of the natural rate of unemployment: a note," Working Papers in Applied Economic Theory 88-01, Federal Reserve Bank of San Francisco.
    5. Harry J. Holzer & Paul Offner, 2001. "Trends in Employment Outcomes of Young Black Men, 1979-2000," JCPR Working Papers 245, Northwestern University/University of Chicago Joint Center for Poverty Research.
    6. M. Badgett, 1994. "Rising black unemployment: Changes in job stability or in employability?," The Review of Black Political Economy, Springer;National Economic Association, vol. 22(3), pages 55-75, March.
    7. James Hines & Hilary Hoynes & Alan B. Krueger, 2001. "Another Look at Whether a Rising Tide Lifts All Boats," Working Papers 833, Princeton University, Department of Economics, Industrial Relations Section..
    8. Romer, Christina D. & Romer, David H., 1994. "Monetary policy matters," Journal of Monetary Economics, Elsevier, vol. 34(1), pages 75-88, August.
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    1. repec:bla:intfin:v:20:y:2017:i:2:p:174-188 is not listed on IDEAS
    2. repec:kap:openec:v:28:y:2017:i:4:d:10.1007_s11079-017-9439-y is not listed on IDEAS
    3. Brainard, Lael, 2017. "Labor Market Disparities and Economic Performance : a speech at "Banking and the Economy: A Forum for Minority Bankers," a conference hosted by the Federal Reserve Bank of Kansas City, Kansa," Speech 972, Board of Governors of the Federal Reserve System (U.S.).
    4. Mathias Klein & Roland Winkler, 2017. "Austerity, Inequality, and Private Debt Overhang," Discussion Papers of DIW Berlin 1633, DIW Berlin, German Institute for Economic Research.
    5. repec:taf:applec:v:49:y:2017:i:26:p:2545-2562 is not listed on IDEAS
    6. Christian Bredemeier & Roland Winkler, 2017. "The employment dynamics of different population groups over the business cycle," Applied Economics, Taylor & Francis Journals, vol. 49(26), pages 2545-2562, June.
    7. repec:eee:moneco:v:88:y:2017:i:c:p:70-89 is not listed on IDEAS
    8. Queneau, Hervé & Sen, Amit, 2012. "On the structure of US unemployment disaggregated by race, ethnicity, and gender," Economics Letters, Elsevier, vol. 117(1), pages 91-95.
    9. Amaral, Pedro S., 2017. "Monetary Policy and Inequality," Economic Commentary, Federal Reserve Bank of Cleveland, issue January.

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