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Titel
Monetary policy and inequality under labor market frictions and capital-skill complementarity / Juan J. Dolado (European University Institute and IZA), Gergö Motyovszki (European University Institute), Evi Pappa (European University Institute) ; IZA Institute of Labor Economics
VerfasserDolado, Juan José ; Motyovszki, Gergö ; Pappa, Euē
KörperschaftForschungsinstitut zur Zukunft der Arbeit
ErschienenBonn, Germany : IZA Institute of Labor Economics, April 2018
Ausgabe
Elektronische Ressource
Umfang1 Online-Ressource (39 Seiten) : Diagramme
SerieDiscussion paper ; no. 11494
URNurn:nbn:de:hbz:5:2-156208 
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 Das Dokument ist öffentlich zugänglich im Rahmen des deutschen Urheberrechts.
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Monetary policy and inequality under labor market frictions and capital-skill complementarity [1.93 mb]
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Zusammenfassung

In order to improve our understanding of the channels through which monetary policy has distributional consequences, we build a New Keynesian model with incomplete asset markets, asymmetric search and matching (SAM) frictions across skilled and unskilled workers and, foremost, capital-skill complementarity (CSC) in the production function. Our main finding is that an unexpected monetary easing increases labor income inequality between high and low-skilled workers, and that the interaction between CSC and SAM asymmetry is crucial in delivering this result. The increase in labor demand driven by such a monetary shock leads to larger wage increases for high-skilled workers than for lowskilled workers, due to the smaller matching frictions of the former (SAM-asymmetry channel). Moreover, the increase in capital demand amplifies this wage divergence due to skilled workers being more complementary to capital than substitutable unskilled workers are (CSC channel). Strict inflation targeting is often the most successful rule in stabilizing measures of earnings inequality even in the presence of shocks which introduce a trade-off between stabilizing inflation and aggregate demand.