Impacts of Inflation and Business Cycle on Wages and Employment Broken Down by Socioprofessional Categories

This study focuses on a possible heterogeneity in short term adjustments of employment and wages to shocks, depending on the Socioprofessional Categorie. Employment and wage series stemming from the French administrative Déclarations Annuelles de données sociales (DADS) database and the French National Accounts are split into four main categories. According to our study, the adjustment to an output shock would mainly affect employment volumes for the less skilled labour (blue-collars and employees) while for executives and intermediate professions an output shock would rather impact wages in the very short term, presumably because of the variable component of their compensation. However, facing a price shock, executives would be less affected in a very short term because their wages adjust faster to inflation, which might be linked to a stronger bargaining power. This gap in indexations among SCs turns out to be non-significant in the short-middle term. An increase in VAT illustrates these different channels by offering an impact both in terms of price and activity. Following such a shock, the purchasing power of all employees would be affected in the short term, but executives and intermediate professions to a slightly lesser extent.