The effects of monetary policy shocks on wage inequality: evidence from Italy

Elton Beqiraj, Stefano Di Bucchianico, Mario Di Serio and Michele Raitano

No 201, CIMEO Working Paper Series from Centre for Investigation and Modelling of Experimental Observations (CIMEO)

Abstract: We use high-frequency Italian administrative data on private-sector employees to examine the impact of monetary policy shocks on wage inequality from 1999 to 2018. We estimate the impulse responses of various wage distribution indicators to exogenous monetary policy shocks, focusing on mean wages, key percentiles, and the Gini index, and distinguishing impacts on monthly gross earnings and full-time equivalent daily wages. Our findings reveal that expansionary monetary policy shocks significantly increase mean wages and reduce wage inequality, in addition to their positive effects on employment and economic activity. These distributional gains mainly accrue to workers in the medium-low segments of the wage distribution. Comparing monthly and unitary wages reveals markedly different responses, indicating that the intensive margin plays a crucial role. Two additional findings emerge when distinguishing workers' subgroups. First, workers employed in small and medium-sized firms benefit comparatively more from expansionary monetary shocks, pointing to a more substantial easing of firms' financial constraints. Second, the wage gap between blue-collar and white-collar workers narrows.

Keywords: Monetary policy shocks; Wage inequality; Employment levels; Administrative data; Labour market; Italy (search for similar items in EconPapers)
JEL-codes: D63 E50 E52 (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.dipecodir.it/wpcom/data/wp_no_201_2026.pdf (application/pdf)

Related works:
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:ter:wpaper:00201

Access Statistics for this paper

More papers in CIMEO Working Paper Series from Centre for Investigation and Modelling of Experimental Observations (CIMEO) Contact information at EDIRC.
Bibliographic data for series maintained by Giovanni Di Bartolomeo ().