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Does Monetary Policy Work Through the Labor Market?

Authors:

Wendy Morrison, Columbia University

Grant Type: doctoral

Grant Year: 2021

Grant Amount: $15,000

Grant description:

This project examines how increasing labor market polarization affects the transmission of monetary policy. Specifically, Morrison will examine how heterogeneity in worker substitutability with capital affects the role the labor market plays in the transmission of monetary policy. The research will estimate the importance of a heterogeneous worker-capital substitutability channel of monetary policy—investment spurred by monetary policy will have muted effects on aggregate consumption if workers whose labor is complementary with capital tend to have lower marginal propensities to consume. To investigate this phenomenon, she first plans to build and solve a model that captures this effect, then estimate the impulse-response functions of wages of workers in various skill categories to unexpected expansionary monetary shocks.

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Does Monetary Policy Work Through the Labor Market?

Authors:

Grant description:

AUTHORS:

Grant Categories

Topics

U.S. economic mobility trends and outcomes

U.S. income and wealth inequality are no longer increasing, but a return to the equitable levels of the mid-20th century isn’t likely anytime soon