Monetary policy and the cost of wage rigidity : evidence from the stock market
- Using a unique confidential contract level dataset merged with firm-level asset price data, we find robust evidence that firms' stock market valuations and employment levels respond more to monetary policy announcements the higher the degree of wage rigidity. Data on the renegotiations of collective bargaining agreements allow us to construct an exogenous measure of wage rigidity. We also find that the amplification induced by wage rigidity is stronger for firms with high labor intensity and low profitability, providing evidence of distributional consequences of monetary policy. We rationalize the evidence through a model in which firms in different sectors feature different degrees of wage rigidity due to staggered renegotiations vis-a-vis unions.
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| Author: | Ester FaiaGND, Vincenzo PezoneORCiD |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-487651 |
| URL: | https://ssrn.com/abstract=3326397 |
| Parent Title (English): | SAFE working paper series ; No. 242 |
| Series (Serial Number): | SAFE working paper (242) |
| Publisher: | SAFE |
| Place of publication: | Frankfurt am Main |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2019 |
| Year of first Publication: | 2019 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2019/02/05 |
| Tag: | distributional consequences of monetary policy; employer-employee level dataset; heterogeneous monetary policy response; heterogeneous wage rigidity; monetary policy surprise shocks |
| Issue: | January 2018 |
| Page Number: | 51 |
| HeBIS-PPN: | 44506000X |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF) | |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE) | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
