Striking a bargain: narrative identification of wage bargaining shocks
Mario Porqueddu and
Andrej Sokol ()
No 2602, Working Paper Series from European Central Bank
We quantify the eﬀects of wage bargaining shocks on macroeconomic aggregates using a structural vector auto-regression model for Germany. We identify exogenous variation in bargaining power from episodes of minimum wage introduction and industrial disputes. This narrative information disciplines the impulse responses to a wage bargaining shock of un-employment and output, and sharpens inference on the behaviour of other variables. The implied transmission mechanism is in line with the theoretical predictions of a large class of search and matching models. We also ﬁnd that wage bargaining shocks explain a sizeable share of aggregate ﬂuctuations in unemployment and inﬂation, that their pass-through to prices is very close to being full, and that they imply plausible dynamics for the vacancy rate, ﬁrms’ proﬁts, and the labour share. JEL Classification: J2, J3, E32, C32
Keywords: industrial action; minimum wage; narrative restrictions; structural vector autoregression; wage bargaining (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20212602
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