{
  "title": "Wage Growth and Inflation in Europe: A Puzzle?",
  "publication": "IMF Working Papers, December 20, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2019/12/20/wage-growth-and-inflation-in-europe-a-puzzle-48845",
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  "summary": "Wages have been rising faster than productivity in many European countries for the past few years, yet signs of underlying consumer price pressures remain limited.",
  "sections": [
    {
      "heading": "Key question and context",
      "content": "- Wages have been rising faster than productivity in many European countries, while signs of underlying consumer price pressures remain limited.\n- The paper examines the historical link between wage growth and inflation in Europe and the factors that influence the strength of the passthrough from labor costs to prices."
    },
    {
      "heading": "Main empirical findings",
      "content": "- Historically, wage growth has led to higher inflation, but the impact has weakened since 2009.\n- Empirical analysis indicates the passthrough from wage growth to inflation is significantly lower in the following conditions:\n  - Periods of subdued inflation and subdued inflation expectations.\n  - Periods of greater competitive pressures.\n  - Periods of robust corporate profitability.\n- Conclusion drawn: the recent pickup in wage growth is likely to have a more muted impact on inflation than in the past."
    },
    {
      "heading": "Implications for policy and interpretation",
      "content": "- Rising wages do not necessarily imply a strong near-term rise in consumer price inflation given weakened wage-inflation transmission since 2009.\n- Policy assessments of inflation risk from labor cost increases should account for:\n  - Current inflation and inflation expectations dynamics.\n  - Degree of competition in product markets.\n  - Corporate profitability conditions."
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      "content": "- Authors: Vizhdan Boranova, Raju Huidrom, Sylwia Nowak, Petia Topalova, Volodymyr Tulin, Richard Varghese\n- Date: December 20, 2019\n- Series: IMF Working Papers; Working Paper No. 2019/280\n- Pages: 40\n- DOI: https://doi.org/10.5089/9781513521275.001\n\nSource: IMF Working Paper “Wage Growth and Inflation in Europe: A Puzzle?” by Vizhdan Boranova et al., December 20, 2019.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/12/20/wage-growth-and-inflation-in-europe-a-puzzle-48845"
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    "Authors: Vizhdan Boranova, Raju Huidrom, Sylwia Nowak, Petia Topalova, Volodymyr Tulin, Richard Varghese",
    "Published: December 20, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513521275.001",
    "Wages have been rising faster than productivity in many European countries, while signs of underlying consumer price pressures remain limited.",
    "The paper examines the historical link between wage growth and inflation in Europe and the factors that influence the strength of the passthrough from labor costs to prices.",
    "Historically, wage growth has led to higher inflation, but the impact has weakened since 2009.",
    "Empirical analysis indicates the passthrough from wage growth to inflation is significantly lower in the following conditions:",
    "Conclusion drawn: the recent pickup in wage growth is likely to have a more muted impact on inflation than in the past.",
    "Rising wages do not necessarily imply a strong near-term rise in consumer price inflation given weakened wage-inflation transmission since 2009.",
    "Policy assessments of inflation risk from labor cost increases should account for:",
    "Authors: Vizhdan Boranova, Raju Huidrom, Sylwia Nowak, Petia Topalova, Volodymyr Tulin, Richard Varghese",
    "Date: December 20, 2019",
    "Series: IMF Working Papers; Working Paper No. 2019/280",
    "Pages: 40",
    "DOI: https://doi.org/10.5089/9781513521275.001",
    "**Working Paper**"
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