The wage–employment nexus: A tale of persistence (VOX)

The weak relationship between wage dynamics and unemployment in the euro area since the Global Crisis is widely perceived as one of the main causes of the ‘twin puzzle’ of missing disinflation between 2009 and 2011, and missing inflation thereafter. This column attributes the weak response of nominal wage growth to employment dynamics since 2008 to the countercyclical behaviour of labour productivity, which is driven, in turn, by the exceptionally high persistence of the downturn and the subsequent recovery.

https://voxeu.org/article/wage-employment-nexus-tale-persistence

Antonio Conti, Elisa Guglielminetti, Marianna Riggi

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