Distributional Effects of Monetary Policy Shocks on Wage and Hours Worked: Evidence from the Czech Labor Market

Monika Junicke, Jakub Matějů, Haroon Mumtaz and Angeliki Theophilopoulou

Working Papers from Czech National Bank, Research and Statistics Department

Abstract: We investigate the heterogeneity in the effects of monetary policy shocks on the distribution of wages and hours worked, using unique contract-level data from the Czech labor market and identifying monetary policy shocks using a narrative approach based on market surprises in interest rate futures. The results suggest that low-wage groups are hit more profoundly by monetary policy shocks than high-wage groups, and the effect of restrictive shocks is stronger in the manufacturing sector than in any other. Exploring other dimensions of the data offers insights into the heterogeneity of the the impact of monetary policy on different demographic groups. We show that low-educated and also young workers are more affected by restrictive monetary policy shocks due to their higher shares in low-wage groups.

Keywords: Heterogeneity; monetary policy; shock identification; wage inequality (search for similar items in EconPapers)
JEL-codes: C32 E24 E52 J31 (search for similar items in EconPapers)
Date: 2023-12
New Economics Papers: this item is included in nep-cba, nep-eur, nep-mon and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2023/4

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