Inflationary shocks hurt US labour market and output – Fed study
As real wages decline, workers search for new, less economically productive jobs, research finds
Inflationary shocks reduce allocative efficiency in the labour market, according to new research from the Federal Reserve Board.
The paper, published this month, finds that a one percentage point rise in inflation increases job-to-job transitions by up to 4.5%. The authors – Gorkem Bostanci, Omer Koru and Sergio Villalvazo – add that people with higher inflation expectations are more likely to search for new employment opportunities and will do so more vigorously.
They add that when workers lose
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