Do Unexpected Inflationary Shocks Raise Workers’ Wages?

Jacob Weber ()

No 20240515, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The past year’s steady decline in nominal wage growth now appears in danger of stalling. Given ongoing uncertainty in Ukraine and the Middle East, this seems an opportune moment to revisit the conventional wisdom about the relationship between inflation and wages: if an unexpected increase in energy costs drives up the cost of living, will workers demand higher wages, reversing the recent moderation in wage growth? In new work with Justin Bloesch and Seung Joo Lee examining those concerns, our analysis shows that the pass-through of such inflationary shocks to wages is weak.

Keywords: inflation; Cost of living; shocks (search for similar items in EconPapers)
JEL-codes: E31 E52 (search for similar items in EconPapers)
Date: 2024-05-15
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