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The Heterogeneous Effects of Monetary Policy on Labor Income: Disentangling the Extensive and Intensive Margins

Author

Listed:
  • Paul Hubert

    (Centre de recherche de la Banque de France - Banque de France, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Frédérique Savignac

    (Centre de recherche de la Banque de France - Banque de France)

Abstract

Using French matched administrative-survey data, we quantify the distributional effects of monetary policy on labor income, decomposing the extensive and intensive margins of these effects. We provide evidence of heterogeneous exposure to unemployment and earnings risks. We find that the effects of ECB monetary policy shocks on labor income are driven by the extensive margin (transitions out of/to unemployment) at the bottom of the earnings distribution and by the intensive margin (changes in labor income for individuals continuously employed) at the top. Sectoral heterogeneity, particularly related to the labor force composition, plays an important role in explaining these heterogeneous effects.

Suggested Citation

  • Paul Hubert & Frédérique Savignac, 2023. "The Heterogeneous Effects of Monetary Policy on Labor Income: Disentangling the Extensive and Intensive Margins," SciencePo Working papers Main hal-04335118, HAL.
    • Handle: RePEc:hal:spmain:hal-04335118
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-04335118
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