Monetary Policy and Labor Income Inequality: the Role of Extensive and Intensive Margins

Paul Hubert and Frédérique Savignac

No 18130, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using French matched administrative-survey data, we quantify the distributional effects of monetary policy on labor income and decompose the extensive and intensive margins of these effects. We find that the effects of ECB monetary policy shocks on labor income are U-shaped along the labor income distribution. These effects are driven by the extensive margin (transitions out or to unemployment) at the bottom of the distribution and by the intensive margin (labor income changes for individuals continuously employed) at the top. We document that sectoral heterogeneity, especially related to the labor force composition, is crucial in explaining these heterogeneous effects.

Keywords: Distributional effects; Household heterogeneity; Labor markets (search for similar items in EconPapers)
JEL-codes: D1 E5 J3 (search for similar items in EconPapers)
Date: 2023-05
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Related works:
Working Paper: Monetary Policy and Labor Income Inequality: the Role of Extensive and Intensive Margins (2023)
Working Paper: Monetary Policy and Labor Income Inequality: the Role of Extensive and Intensive Margins (2023)
Working Paper: Monetary Policy and Labor Income Inequality: the Role of Extensive and Intensive Margins (2023)
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