On industrial relations and inflation: a long-term perspective

Joshua Cova

Transfer: European Review of Labour and Research, 2025, vol. 30, issue 3, 277-298

Abstract: The 2021–2023 surge in inflation rates witnessed across many advanced economies reignited concerns about demand-driven inflationary pressures derived from wage growth. Historically, wage demands and demand-driven inflationary pressures have been channelled through organised labour, which wielded greater institutional power than it does today. This article revisits the link between industrial relations and inflation, employing a political-economy lens that views inflation as the product of political and distributive conflicts between capital and labour. Employing a variety of econometric techniques on a panel of OECD economies, the study finds that although historically there has been a positive relationship between strong industrial relations and inflation, this association has weakened progressively, becoming statistically insignificant in recent decades. This indicates that, in advanced capitalist economies, the activities of organised labour are no longer as closely linked to inflation rates as they were in the 1970s.

Keywords: Inflation; industrial relations; econometrics; political economy; wage-price spirals (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:treure:v:30:y:2025:i:3:p:277-298

DOI: 10.1177/10242589241295362

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