Striking a bargain: narrative identification of wage bargaining shocks
Mario Porqueddu and
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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Journal Article: Striking a bargain: narrative identification of wage bargaining shocks (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20212602
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