Beyond the averages: Measuring underlying wage growth using Labour Force Survey microdata

Fares Bounajm, Tessa Devakos and Gabriela Galassi

No 2024-23, Staff Analytical Notes from Bank of Canada

Abstract: When it comes to understanding the influence of labour costs on inflation, average wage growth is a misleading indicator because it is affected by composition effects. We propose an alternative measure that corrects for these effects by using microdata from the Labour Force Survey. Our new measure has many desirable properties, including reduced volatility and a better relationship with labour market fundamentals.

Keywords: Econometric and statistical methods; Labour markets (search for similar items in EconPapers)
JEL-codes: C3 C31 J2 J21 J3 J30 J31 J8 J82 (search for similar items in EconPapers)
Date: 2024-10
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