Monetary policy effects on wage inequality: evidence from Italy

Elton Beqiraj (elton.beqiraj@uniroma1.it), Stefano Di Bucchianico, Mario Di Serio (mdiserio@unisa.it) and Michele Raitano

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: This study examines the impact of monetary policy on wage inequality in Italy from 1999m1 to 2018m12, using a newly assembled dataset based on high-frequency administrative data on private-sector employees from the Italian Social Security Institute (INPS). By applying the Smooth Local Projection (SLP) method, we derive the impulse responses to exogenous monetary policy shocks of average wages and of the Gini index of wage inequality and other indicators of the wage distribution. Our findings show that expansionary monetary policy significantly reduces wage inequality while stimulating economic activity. Furthermore, distinguishing workers’ subgroups according to sector of activity, occupation and firm’s size, we find that expansionary monetary policy decreases wage inequality both 'between' and 'within' subgroups

Keywords: Monetary policy shocks; Wage inequality; Italian data; Earnings heterogeneity; Labour market (search for similar items in EconPapers)
JEL-codes: D63 E50 E52 (search for similar items in EconPapers)
Date: 2024-08
New Economics Papers: this item is included in nep-ban, nep-cba, nep-lma and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:912

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