The Heterogeneous Effects of Monetary Policy on Labor Income: Disentangling the Extensive and Intensive Margins

Paul Hubert and Frédérique Savignac

Journal of Political Economy Macroeconomics, 2024, vol. 2, issue 4, 687 - 719

Abstract: Using French matched administrative survey data, we quantify the distributional effects of monetary policy on labor income, decomposing the extensive and intensive margins of these effects. We provide evidence of heterogeneous exposure to unemployment and earnings risks. We find that the effects of European Central Bank monetary policy shocks on labor income are driven by the extensive margin (transitions out of/into unemployment) at the bottom of the earnings distribution and by the intensive margin (changes in labor income for individuals continuously employed) at the top. Sectoral heterogeneity, particularly related to the labor force composition, plays an important role in explaining these heterogeneous effects.

Date: 2024
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Working Paper: The Heterogeneous Effects of Monetary Policy on Labor Income: Disentangling the Extensive and Intensive Margins (2023)
Working Paper: The Heterogeneous Effects of Monetary Policy on Labor Income: Disentangling the Extensive and Intensive Margins (2023)
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