Katalin Bodnár
Economics
- Division
Prices & Costs
- Current Position
-
Principal Economist
- Fields of interest
-
Macroeconomics and Monetary Economics,Labour Economics
- Education
- 1997-2002
MA in Economics, University of Debrecen, Hungary
- Professional experience
- 2021-2023
Principal Economist - Prices and Costs Division, Directorate General Economics, European Central Bank
- 2017-2021
Economist and Principal Economist – Supply Side, Labour and Surveillance Division, Directorate General Economics, European Central Bank
- 2015-2017
Economist – Output and Demand Division, Directorate General Economics, European Central Bank
- 2009-2015
Economist – Directorate General Economics, Magyar Nemzeti Bank
- 2004-2009
Economist - Financial Stability, Magyar Nemzeti Bank
- 2008-2009
Economist – Monetary Strategy and Analysis Division, Directorate General Monetary Policy, European Central Bank
- 25 September 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 6, 2024Details
- Abstract
- Wage indicators give policymakers a key perspective on the outlook for inflation through the effect of wages on the price-setting of firms and on the consumption behaviour of households. This box studies recent developments in wage indicators, with a particular focus on wage drift, which has recently been in decline. The moderation of wage drift is key to explaining the easing of growth in compensation per employee. This is due to negotiated wage growth taking over the role of achieving inflation compensation from wage drift. The recovery of average hours worked after the pandemic had also been pushing the wage drift up, but this impact has weakened recently.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
J30 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→General
J52 : Labor and Demographic Economics→Labor?Management Relations, Trade Unions, and Collective Bargaining→Dispute Resolution: Strikes, Arbitration, and Mediation, Collective Bargaining
- 25 April 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 3, 2024Details
- Abstract
- Changes in energy prices and wage costs can, to the extent these are passed through to consumer prices, have important effects on HICP inflation excluding energy and food (HICPX). Data from different sources can be matched to obtain the cost shares of energy and wages in various sectors. Since the importance of changes in input costs is likely to increase with the share of such costs in the overall input costs or in the production of a service or a good, this information allows HICPX inflation to be broken down into indicators for energy-sensitive and not energy-sensitive items, as well as into contributions from wage-sensitive and not wage-sensitive items. The energy-sensitive HICPX inflation indicator derived in this way illustrates the important role of the energy shock in HICPX inflation developments over the last few years. Similarly, the indicator for wage-sensitive HICPX inflation signals an important role for wages as a driver of underlying inflation in the euro area, especially more recently. The two indicators have little overlap – which helps in interpreting their signals.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
P44 : Economic Systems→Other Economic Systems→National Income, Product, and Expenditure, Money, Inflation
J30 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→General
Q4 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Energy
- 25 April 2024
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 3, 2024Details
- Abstract
- Headline and core inflation levels and momentum dynamics in the euro area are currently somewhat weaker than in the United States, reflecting buoyant rent inflation and consumption growth in the United States but also the different cyclical positions of the two economies. Core inflation remains elevated overall in both economic areas, due notably to high levels of services inflation. At the same time, goods inflation has declined considerably, in line with the normalisation of disrupted supply chains at the global level and lower commodity prices. Labour costs started moderating earlier in the United States, with euro area wage growth peaking later and productivity growth being muted by cyclical and structural factors.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E58 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Central Banks and Their Policies
- 4 August 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2023Details
- Abstract
- This box describes some key measures of underlying inflation and reassesses their predictive power for euro area headline inflation over a medium-term horizon. It discusses recent developments in underlying inflation and implications for the inflation outlook. It examines how underlying inflation measures can be adjusted to filter out some of the recent extraordinary shocks to inflation. Lastly, it analyses goods and services inflation individually.
- JEL Code
- C52 : Mathematical and Quantitative Methods→Econometric Modeling→Model Evaluation, Validation, and Selection
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
- 29 June 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2023Details
- Abstract
- This box examines the wage share in the euro area, which has edged down since the start of the pandemic, as workers have so far not been able to recover real wage losses amidst high inflation and robust profit margins. The decline is in most sectors, except for less contact-intensive private services and public services. The reduced wage share suggests that part of the recent terms-of-trade shock and its impact on consumer price inflation has been absorbed by workers and that second-round effects from wages on inflation have so far been relatively moderate.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E25 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Aggregate Factor Income Distribution
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Forecasting and Simulation: Models and Applications
- 11 May 2023
- WORKING PAPER SERIES - No. 2815Details
- Abstract
- Euro area labour market variables are published with a considerable lag, longer than in the case of real GDP. We develop a suite of models to provide a more timely estimate (nowcast) of euro area quarterly employment growth based on a broad range of monthly indicators. The suite includes a batch of different dynamic factor model and bridge equation specifications. We evaluate it in real time over 2013-2022 and find that (i) monthly indicators provide useful information for a timely assessment of employment developments with unemployment rates and sentiment indicators containing most of the relevant information, (ii) the performance of small-scale models is comparable to those based on a larger information set, (iii) the suite performs favourably compared to the Eurosystem/ECB staff macroeconomic projections,(iv) forecasting performance deteriorates temporarily at the initial stage of the COVID-19 pandemic period, but the models outperform the benchmarks again thereafter.
- JEL Code
- C53 : Mathematical and Quantitative Methods→Econometric Modeling→Forecasting and Prediction Methods, Simulation Methods
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Forecasting and Simulation: Models and Applications
- 9 January 2023
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2022Details
- Abstract
- This box examines cross-country developments in compensation per employee since the start of the coronavirus (COVID-19) pandemic. The pandemic has strongly affected wage developments across euro area countries, reflecting standard cyclical and structural determinants as well as novel factors, such as differences in the size and impact of the shock or the specificities of national job retention schemes.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
- 9 January 2023
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 8, 2022Details
- Abstract
- This article discusses wage developments and the main factors that have influenced them since the start of the pandemic. First, it reviews developments in a broad range of wage measures for the euro area and discusses their current usefulness as signals of wage pressures. In this context, it illustrates how the growth of compensation per employee was adjusted for the impact of job retention schemes. Second, the article looks at how wage developments have differed across sectors, reflecting the heterogeneous impact of the pandemic shock. Finally, it discusses the impact of inflation on purchasing power of wage incomes and real wage costs in the euro area by examining developments in real consumer and producer wages for the economy as a whole and in its main sectors.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
J30 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→General
J31 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→Wage Level and Structure, Wage Differentials
J38 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→Public Policy
- 9 September 2022
- WORKING PAPER SERIES - No. 2717Details
- Abstract
- The COVID-19 crisis has affected economic sectors very heterogeneously, with possible risks for permanent losses in some sectors. This paper presents a sectoral-level, bottom-up method to estimate euro area potential output in order to assess the impact of the crisis on it. The estimates are based on a supply-demand shock decomposition and are meant to quantitatively support the estimation of scarring effects stemming from the pandemic. The results show that sectors of “trade, transport and accommodation”, “other services” and “industry” may suffer a loss in trend output of around 1.4-1.6% by 2025. Aggregate potential output in 2025 might be about 0.8% lower than it would have been without the crisis, and importantly, without support from the Next Generation EU (NGEU), signalling somewhat larger losses than embedded in the Autumn 2021 forecast of the European Commission (which takes the NGEU into account).
- JEL Code
- C32 : Mathematical and Quantitative Methods→Multiple or Simultaneous Equation Models, Multiple Variables→Time-Series Models, Dynamic Quantile Regressions, Dynamic Treatment Effect Models, Diffusion Processes
D24 : Microeconomics→Production and Organizations→Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
E37 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Forecasting and Simulation: Models and Applications
- 21 June 2022
- OCCASIONAL PAPER SERIES - No. 296Details
- Abstract
- The euro area, like many other advanced economies, has entered an era of drastic demographic change. Without appropriate policy responses, population ageing in the euro area is posing formidable challenges for potential growth, monetary policy and public finances. This paper examines – from a central bank’s perspective – the macroeconomic and fiscal effects of population ageing in the euro area and looks at the main challenges ahead in the next decades. Total population in the euro area is projected to decline as of around 2035, while the old-age dependency ratio will rise strongly in the coming 15 years, putting additional burden on pension systems. The analysis in the paper finds that the demographic changes in the euro area present a drag on potential growth, mainly through labour supply and productivity growth – similarly to developments in Japan, which is ahead of the euro area in terms of population ageing. Precautionary savings may be higher, and the natural rate of interest lower, while the effect on trend inflation and wages are not obvious. Population ageing is posing a burden on fiscal policy, through upward pressure on pension spending and adversely affecting the tax bases and the structure of public revenues. Thus, it poses significant challenges for fiscal sustainability, limits fiscal policy space and effectiveness. To safeguard against the adverse economic and fiscal consequences of population ageing, there is a need for fiscal buffers, improved quality of public finance and structural reforms.
- JEL Code
- E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E62 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Fiscal Policy
J11 : Labor and Demographic Economics→Demographic Economics→Demographic Trends, Macroeconomic Effects, and Forecasts
J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
- 21 June 2022
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 4, 2022Details
- Abstract
- This box examines recent developments in euro area food inflation and the channels through which it is being affected by the Russia-Ukraine war. Euro area HICP food inflation reached a historical high in April 2022. The rise has been driven primarily by increasing global energy and food commodity prices since the second half of 2021. The war and its repercussions are hindering the import of energy and food commodities in the euro area and contributing to further increases in global prices. While the European Union is mostly self-sufficient in terms of agricultural products, producing more than it consumes, this is exacerbating already existing pressures in euro area food markets.
- JEL Code
- E31 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Price Level, Inflation, Deflation
F10 : International Economics→Trade→General
F51 : International Economics→International Relations, National Security, and International Political Economy→International Conflicts, Negotiations, Sanctions
- 17 February 2022
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 1, 2022Details
- Abstract
- This box assesses the role of migration in weak labour force developments during the COVID-19 pandemic. The labour force in the euro area remains well below the dynamics expected before the outbreak of the pandemic. This gap reflects both a weaker than expected growth in the working age population and a lower than expected labour force participation rate. Subdued net immigration may have contributed to these developments, with some foreign workers resettling in their home countries. It is likely that several factors have weighed on inward migration flows, including weaker employment prospects, travel restrictions and pervasive uncertainty induced by the pandemic. The share of foreign workers in the euro area may gradually converge towards the levels expected pre-pandemic, but risks are overall tilted to the downside.
- JEL Code
- E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
J11 : Labor and Demographic Economics→Demographic Economics→Demographic Trends, Macroeconomic Effects, and Forecasts
J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
- 11 November 2021
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 7, 2021Details
- Abstract
- This box assesses labour supply developments during the COVID-19 pandemic. During the pandemic labour supply has fallen sharply. It has partially recovered, although it remains substantially below pre-pandemic levels. While labour force was initially affected in a similar way across the largest euro area countries, there was also some heterogeneity across countries and demographic groups. When taking the pre-pandemic trends into account, workers with a low and medium level of education as well as older workers explain the largest part of the current gap to the pre-pandemic trends. A full recovery of labour force participation to the rising pre-pandemic trend will likely be gradual.
- JEL Code
- E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
J11 : Labor and Demographic Economics→Demographic Economics→Demographic Trends, Macroeconomic Effects, and Forecasts
J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
- 21 September 2021
- OCCASIONAL PAPER SERIES - No. 275Details
- Abstract
- This report discusses the role of the European Union’s full employment objective in the conduct of the ECB’s monetary policy. It first reviews a range of indicators of full employment, highlights the heterogeneity of labour market outcomes within different groups in the population and across countries, and documents the flatness of the Phillips curve in the euro area. In this context, it is stressed that labour market structures and trend labour market outcomes are primarily determined by national economic policies. The report then recalls that, in many circumstances, inflation and employment move together and pursuing price stability is conducive to supporting employment. However, in response to economic shocks that give rise to a temporary trade-off between employment and inflation stabilisation, the ECB’s medium-term orientation in pursuing price stability is shown to provide flexibility to contribute to the achievement of the EU’s full employment objective. Regarding the conduct of monetary policy in a low interest rate environment, model-based simulations suggest that history-dependent policy approaches − which have been proposed to overcome lasting shortfalls of inflation due to the effective lower bound on nominal interest rates by a more persistent policy response to disinflationary shocks − can help to bring employment closer to full employment, even though their effectiveness depends on the strength of the postulated expectations channels. Finally, the importance of employment income and wealth inequality in the transmission of monetary policy strengthens the case for more persistent or forceful easing policies (in pursuit of price stability) when interest rates are constrained by their lower bound.
- JEL Code
- E52 : Macroeconomics and Monetary Economics→Monetary Policy, Central Banking, and the Supply of Money and Credit→Monetary Policy
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
- 21 September 2021
- OCCASIONAL PAPER SERIES - No. 268Details
- Abstract
- The aim of this report is to foster a better understanding of past trends in, and drivers of, productivity growth in the countries of the European Union (EU) and of the interplay between productivity and monetary policy. To this end, a group of experts from 15 national central banks and the European Central Bank (ECB) joined forces and pooled data and expertise for more than 18 months to produce the report. Group members drew on the extensive research already conducted on productivity growth, including within the European System of Central Banks and in the context of the review of the ECB’s monetary policy strategy, and worked together to conduct new analyses.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
D24 : Microeconomics→Production and Organizations→Production, Cost, Capital, Capital, Total Factor, and Multifactor Productivity, Capacity
D61 : Microeconomics→Welfare Economics→Allocative Efficiency, Cost?Benefit Analysis
O33 : Economic Development, Technological Change, and Growth→Technological Change, Research and Development, Intellectual Property Rights→Technological Change: Choices and Consequences, Diffusion Processes
O47 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→Measurement of Economic Growth, Aggregate Productivity, Cross-Country Output Convergence
O52 : Economic Development, Technological Change, and Growth→Economywide Country Studies→Europe
- 10 November 2020
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 7, 2020Details
- Abstract
- The coronavirus (COVID-19) pandemic almost certainly affected potential output negatively via various channels, affecting the trends of total factor productivity, capital and labour. Quantitative estimates show that euro area potential growth will likely stall or even decline in 2020 and the pace of the recovery is highly uncertain, as it depends on whether the shock is temporary or persistent. Comprehensive policy measures are playing a crucial role in preventing hysteresis in the euro area economy and long-term economic scarring.
- JEL Code
- E22 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Capital, Investment, Capacity
E23 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Production
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E32 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles→Business Fluctuations, Cycles
O11 : Economic Development, Technological Change, and Growth→Economic Development→Macroeconomic Analyses of Economic Development
O40 : Economic Development, Technological Change, and Growth→Economic Growth and Aggregate Productivity→General
- 29 July 2020
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 5, 2020Details
- Abstract
- With the ageing of the baby boom generation, the population share of the older working-age cohort, i.e. those between 55 and 74 years, has been gradually increasing. This age group has also seen a considerable rise in the labour force participation rate. This article examines the reasons behind the increase across euro area countries. Most euro area countries adopted substantial pension reforms in the last two decades to reduce risks to long-term fiscal sustainability. These pension reforms, complemented by other labour market reforms, can be expected to have boosted the labour force participation rate of older workers. While other factors, like better health conditions, rising life expectancy, higher educational levels, mainly among women, rising net wealth and labour market conditions have likely contributed, they alone cannot explain the particularly sharp rebound in the participation rate of older workers since 2000. The macroeconomic shock due to the on-going lock-down measures may, however, put further increases of the labour force participation rate at risk.
- JEL Code
- J11 : Labor and Demographic Economics→Demographic Economics→Demographic Trends, Macroeconomic Effects, and Forecasts
J14 : Labor and Demographic Economics→Demographic Economics→Economics of the Elderly, Economics of the Handicapped, Non-Labor Market Discrimination
J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
J26 : Labor and Demographic Economics→Demand and Supply of Labor→Retirement, Retirement Policies
H55 : Public Economics→National Government Expenditures and Related Policies→Social Security and Public Pensions
- 20 December 2018
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 8, 2018Details
- Abstract
- In the third quarter of 2018, the total number of people in employment in the euro area was 9.6 million higher than in the second quarter of 2013 (when it fell to its lowest point during the crisis). The increase in employment in the course of the recovery has more than offset the decline observed during the crisis. As a result, euro area employment is now at its highest level ever, standing at 158.3 million. This box describes the net employment growth in the euro area over the course of the recovery and compares it with the period from the first quarter of 1999 to the first quarter of 2008 (i.e. from the introduction of the euro to the start of the crisis), which was also characterised by a continuous increase in employment at the level of the euro area as a whole.
- JEL Code
- J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
J11 : Labor and Demographic Economics→Demographic Economics→Demographic Trends, Macroeconomic Effects, and Forecasts
- 22 March 2018
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 2, 2018Details
- Abstract
- In the euro area, there has been an increasing reliance on part-time work. The share of part-time workers is now about 22% of total employment, and part-time work has accounted for about one quarter of net employment growth over the euro area labour market recovery (starting in the second quarter of 2013). This box examines the latest developments and the characteristics of the two main groups of part-time workers: underemployed and non-underemployed part-time workers.
- JEL Code
- J01 : Labor and Demographic Economics→General→Labor Economics: General
J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
- 7 February 2018
- ECONOMIC BULLETIN - ARTICLEEconomic Bulletin Issue 1, 2018Details
- Abstract
- This article examines the main factors behind the recent changes in euro area labour supply and how they have influenced employment developments. It finds that the increasing supply from older people and women, as well as immigration, have had a significant influence on employment growth during the economic recovery. Both migration and the numbers of older people and women in or seeking work have been driven by long-term trends and structural changes, while migration has also been affected by several cyclical factors. In the medium to longer term, labour supply is expected to decline as the population ages. This calls for policies to support labour force and employment growth, for example by helping the long-term unemployed, migrants and other groups whose participation rates remain low, to enter or return to the labour market, or find jobs that better match their skills.
- JEL Code
- J01 : Labor and Demographic Economics→General→Labor Economics: General
J21 : Labor and Demographic Economics→Demand and Supply of Labor→Labor Force and Employment, Size, and Structure
J22 : Labor and Demographic Economics→Demand and Supply of Labor→Time Allocation and Labor Supply
J61 : Labor and Demographic Economics→Mobility, Unemployment, Vacancies, and Immigrant Workers→Geographic Labor Mobility, Immigrant Workers
- 31 January 2018
- WORKING PAPER SERIES - No. 2124Details
- Abstract
- More than five years after the start of the Sovereign debt crisis in Europe, its impact on labour market outcomes is not clear. This paper aims to fill this gap. We use qualitative firm-level data for 24 European countries, collected within the Wage Dynamics Network (WDN) of the ESCB. We first derive a set of indices measuring difficulties in accessing the credit market for the period 2010-13. Second, we provide a description of the relationship between credit difficulties and changes in labour input both along the extensive and the intensive margins as well as on wages. We find strong and significant correlation between credit difficulties and adjustments along both the extensive and the intensive margin. In the presence of credit market difficulties, firms cut wages by reducing the variable part of wages. This evidence suggests that credit shocks can affect not only the real economy, but also nominal variables.
- JEL Code
- D53 : Microeconomics→General Equilibrium and Disequilibrium→Financial Markets
E24 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital
E44 : Macroeconomics and Monetary Economics→Money and Interest Rates→Financial Markets and the Macroeconomy
G31 : Financial Economics→Corporate Finance and Governance→Capital Budgeting, Fixed Investment and Inventory Studies, Capacity
G32 : Financial Economics→Corporate Finance and Governance→Financing Policy, Financial Risk and Risk Management, Capital and Ownership Structure, Value of Firms, Goodwill - Network
- Wage dynamics network
- 10 January 2018
- WORKING PAPER SERIES - No. 2122Details
- Abstract
- We study the transmission channels for rises in the minimum wage using a unique firm-level dataset from eight Central and Eastern European countries. Representative samples of firms in each country were asked to evaluate the relevance of a wide range of adjustment channels following specific instances of rises in the minimum wage during the recent post-crisis period. The paper adds to the rest of literature by presenting the reactions of firms as a combination of strategies, and evaluates the relative importance of those strategies. Our findings suggest that the most popular adjustment channels are cuts in non-labour costs, rises in product prices, and improvements in productivity. Cuts in employment are less popular and occur mostly through reduced hiring rather than direct layoffs. Our study also provides evidence of potential spillover effects that rises in the minimum wage can have on firms without minimum wage workers.
- JEL Code
- D22 : Microeconomics→Production and Organizations→Firm Behavior: Empirical Analysis
E23 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Production
J31 : Labor and Demographic Economics→Wages, Compensation, and Labor Costs→Wage Level and Structure, Wage Differentials - Network
- Wage dynamics network
- 2021
- Baltic Journal of Economics
- 2018
- IZA Journal of Labor Policy