How Much Do Labor Costs Affect Prices in Recessions and in Expansions?

Marios Karabarbounis

Richmond Fed Economic Brief, 2023, vol. 23, issue 14

Abstract: Inflation had been quite low in the decade following the Great Recession but surged following the COVID-19 recession. Can labor costs explain this change in the dynamics of inflation? According to recent research, the relatively stable inflation in the last decade indicates a weaker pass-through of labor costs to wages, especially in the goods sector of the economy. The current inflationary episode, however, suggests that the wage-price pass-through may have regained its strength.

Keywords: Inflation; labor costs; core goods inflation (search for similar items in EconPapers)
Date: 2023
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