Inflation Adjustment and Labour Market Structures: Evidence from a Multi-Country Study

Luca Nunziata and Christopher Bowdler ()

No 1510, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: An empirical analysis of the impact of labour market structures on the response of inflation to macroeconomic shocks is presented. Results based on a 20 country panel show that if labour market coordination is high, the effect on inflation of movements in unemployment, import prices, tax rates and productivity is dampened, both on impact and dynamically. In contrast, monopoly power in labour supply, measured by the percentage unionisation of the workforce, appears to amplify the response of inflation to its reduced form determinants. These findings are attributed to the behaviour of wages following movements in demand- and supply-side conditions.

Keywords: inflation; input price shocks; labour market coordination; trade union density (search for similar items in EconPapers)
JEL-codes: E31 J51 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2005-03
New Economics Papers: this item is included in nep-cba, nep-cwa and nep-mac
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Citations: View citations in EconPapers (10)

Published - published in: Scandinavian Journal of Economics, 2007, 109 (3), 619-642

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Journal Article: Inflation Adjustment and Labour Market Structures: Evidence from a Multi‐country Study* (2007)
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