Journal of Applied Econometrics· 2026Q1
Striking a Bargain: Narrative Identification of Wage Bargaining Shocks
- 6citations
- Q1SCImago
- 2026year
Short summary
German minimum wage introductions and strikes reveal that wage bargaining shocks significantly drive aggregate fluctuations in unemployment and inflation.
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Key points
- German minimum wage introductions and strikes are used to identify exogenous variation in wage bargaining power.
- Wage bargaining shocks are found to meaningfully contribute to aggregate fluctuations in unemployment and inflation.
- These shocks exhibit substantial pass-through to prices.
- The identified dynamics are consistent with search-and-matching models for vacancy rates, firm profits, and the labor share.
AI-generated from the title and abstract; the full text is not read.
Abstract
ABSTRACT Wage markup shocks, an important driver of business cycles, are hard to pin down. We quantify the importance of exogenous variation in wage bargaining power, one source of those shocks, from German minimum wage introduction episodes and strikes. This disciplines the impulse responses of unemployment and output, and sharpens inference for other variables, which behave consistently with predictions from search‐and‐matching models. We find that wage bargaining shocks meaningfully contribute to aggregate fluctuations in unemployment and inflation, exhibit substantial pass‐through to prices, and imply plausible dynamics for the vacancy rate, firms' profits, and the labor share.
The authors' abstract, as published at the source. Journal of Applied Econometrics, 2026 · DOI ↗
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Field: Public Administration
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