Data and Replication Code for: Monetary Policy and Inequality under Labor Market Frictions and Capital-Skill Complementarity
Principal Investigator(s): View help for Principal Investigator(s) Juan Dolado, Universidad Carlos III de Madrid; Gergo Motyovszki, European University Institute; Evi Pappa, Universidad Carlos III de Madrid
Version: View help for Version V1
| Name | File Type | Size | Last Modified |
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| empirical SVAR analysis | 03/30/2020 08:37:AM | ||
| theoretical DSGE model | 10/07/2020 02:58:PM | ||
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application/pdf | 292.6 KB | 03/30/2020 04:01:AM |
Project Citation:
Dolado, Juan, Motyovszki, Gergo, and Pappa, Evi. Data and Replication Code for: Monetary Policy and Inequality under Labor Market Frictions and Capital-Skill Complementarity. Nashville, TN: American Economic Association [publisher], 2021. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2021-03-18. https://doi.org/10.3886/E117386V1
Project Description
Summary:
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We provide a new channel through which monetary policy has distributional consequences at business cycle frequencies. We show that an unexpected monetary easing increases labor income inequality between high and less-skilled workers. To rationalize these findings we build a New Keynesian DSGE model with asymmetric search and matching (SAM) frictions and capital-skill complementarity (CSC) in production. We show that CSC on its own introduces a dynamic demand amplification mechanism: the increase in high-skilled employment after a monetary expansion makes complementary capital more productive, encouraging a further rise in investment demand and creating a multiplier effect. SAM asymmetries magnify this channel.
Funding Sources:
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European University Institute research grant (IE-54);
Spanish Ministerio de Economıa y Competitividad (ECO2016-78652)
Scope of Project
Subject Terms:
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Monetary policy;
Search and matching;
Inequality;
Capital-skill complementarity
JEL Classification:
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E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E25 Aggregate Factor Income Distribution
E52 Monetary Policy
J64 Unemployment: Models, Duration, Incidence, and Job Search
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E25 Aggregate Factor Income Distribution
E52 Monetary Policy
J64 Unemployment: Models, Duration, Incidence, and Job Search
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