{
  "title": "Inflation and Labor Markets: A Bottom-Up View",
  "publication": "IMF Working Papers, October 11, 2024",
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  "summary": "U.S. inflation surged in 2021-22 and has since declined, driven largely by a sharp drop in goods inflation, though services inflation remains elevated.",
  "sections": [
    {
      "heading": "Authors and publication",
      "content": "- By Sophia Chen, Deniz O Igan, Do Lee, Prachi Mishra\n- October 11, 2024\n- IMF Working Papers, Working Paper No. 2024/220, Issue: 220, Volume: 2024\n- Pages: 37\n- DOI: https://doi.org/10.5089/9798400291807.001\n- ISBN: 9798400291807\n- Stock No: WPIEA2024220\n- ISSN: 1018-5941"
    },
    {
      "heading": "Research focus and scope",
      "content": "- Zooms into services inflation within the U.S. context where inflation surged in 2021-22 and has since declined.\n- Emphasizes that goods inflation drove much of the surge and subsequent decline, while services inflation remains elevated.\n- Uses proprietary microdata on wages to examine the relationship between service sector wage growth and services inflation at the Metropolitan Statistical Area (MSA) level."
    },
    {
      "heading": "Methodology",
      "content": "- Empirical approach: local projection instrumental variable model.\n- Identification strategy: exploits variation in labor market tightness across MSAs as an instrument to estimate wage-price pass-through.\n- Unit of analysis: Metropolitan Statistical Area (MSA) level wage and price data.\n- Data input: proprietary microdata on wages (service sector wage growth)."
    },
    {
      "heading": "Key findings",
      "content": "- There is a positive and significant relationship between wages and price growth in the service sector.\n- The wage-price pass-through exhibits a lagged effect.\n- The findings imply that effects of tight labor markets are persistent and may influence the pace of progression toward the inflation target."
    },
    {
      "heading": "Subject tags and keywords (as provided)",
      "content": "- Subjects: Economic sectors, Housing, Inflation, Labor, Labor markets, National accounts, Prices, Services sector, Wages\n- Keywords: Global, goods inflation, Housing, IMF working paper No. 2024/220, Inflation, Labor Market Conditions, Labor markets, services inflation, Services sector, wage growth, wage-price pass-through, Wages\n\nSource: IMF Working Papers — \"Inflation and Labor Markets: A Bottom-Up View\", IMF Working Papers 2024, 220 (2024).\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/2024/10/11/inflation-and-labor-markets-a-bottom-up-view-556258"
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    "Authors: Sophia Chen, Deniz O Igan, Do Lee, Prachi Mishra",
    "Published: October 11, 2024",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400291807.001",
    "By Sophia Chen, Deniz O Igan, Do Lee, Prachi Mishra",
    "October 11, 2024",
    "IMF Working Papers, Working Paper No. 2024/220, Issue: 220, Volume: 2024",
    "Pages: 37",
    "DOI: https://doi.org/10.5089/9798400291807.001",
    "ISBN: 9798400291807",
    "Stock No: WPIEA2024220",
    "ISSN: 1018-5941",
    "Zooms into services inflation within the U.S. context where inflation surged in 2021-22 and has since declined.",
    "Emphasizes that goods inflation drove much of the surge and subsequent decline, while services inflation remains elevated.",
    "Uses proprietary microdata on wages to examine the relationship between service sector wage growth and services inflation at the Metropolitan Statistical Area (MSA) level.",
    "Empirical approach: local projection instrumental variable model.",
    "Identification strategy: exploits variation in labor market tightness across MSAs as an instrument to estimate wage-price pass-through.",
    "Unit of analysis: Metropolitan Statistical Area (MSA) level wage and price data.",
    "Data input: proprietary microdata on wages (service sector wage growth).",
    "There is a positive and significant relationship between wages and price growth in the service sector.",
    "The wage-price pass-through exhibits a lagged effect.",
    "The findings imply that effects of tight labor markets are persistent and may influence the pace of progression toward the inflation target.",
    "Subjects: Economic sectors, Housing, Inflation, Labor, Labor markets, National accounts, Prices, Services sector, Wages",
    "Keywords: Global, goods inflation, Housing, IMF working paper No. 2024/220, Inflation, Labor Market Conditions, Labor markets, services inflation, Services sector, wage growth, wage-price pass-through, Wages",
    "**Working Paper**"
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