Striking a bargain: Narrative identification of wage bargaining shocks

Arbeitspapier

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 unemployment 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 uctuations in unemployment and in ation, 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.

Object Details

• ISBN: 978-92-899-4855-5
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2602

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Multiple or Simultaneous Equation Models: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
• Subject: Wage bargaining ; minimum wage ; industrial action ; narrative restrictions ; structural vector autoregression

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Budrys, Žymantas ; Porqueddu, Mario ; Sokol, Andrej
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2021

Further information

• DOI: doi:10.2866/748825
• Handle: http://hdl.handle.net/10419/246179
• Last update: 10.03.2025, 11:43 AM CET