The labor supply of baby-boomers and low-flation

Benoit Mojon and Xavier Ragot

SciencePo Working papers Main from HAL

Abstract: Why is wage inflation so weak in spite of the recent sharp reduction in unemployment? We show that this may be due to an ongoing major positive labor supply shock. Indeed, the participation rate of workers aged between 55 and 64 has increased steadily over the last decade, from a third to above a half on average across OECD countries. This is most likely the consequence of aging and the reform of pensions. We show that the participation rate of workers aged 55 to 64 contributes to explain why wage inflation has remained weak over the last five years. For instance, it accounts for as much as -1% of wage inflation per annum in Germany since 2013. Our second result is that Phillips curves are alive and well. Wage inflation remains highly responsive to domestic unemployment rates, including after the Great Recession.

Keywords: Monetary policy; Wages; Compensation; Labor costs (search for similar items in EconPapers)
Date: 2018-01-01
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03444399
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://sciencespo.hal.science/hal-03444399/document (application/pdf)

Related works:
Working Paper: The labor supply of baby boomers and low flation (2018)
Working Paper: The labor supply of baby-boomers and low-flation (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03444399

Access Statistics for this paper

More papers in SciencePo Working papers Main from HAL
Bibliographic data for series maintained by Contact - Sciences Po Departement of Economics ().