Sectoral Wage and Employment Effects of Monetary Policy Shocks
Published:
I adapt the Bayesian Local Projection framework of Ferreira, Miranda-Agrippino, and Ricco (2025) to a panel setting to jointly estimate the employment and wage responses to monetary policy shocks across sixteen supersectors, using the narrative shocks of Aruoba and Drechsel (2024). I document substantial heterogeneity in the sign, magnitude, and timing of responses, and find that price-rigidity measures explain little of it—instead, more upstream and more heavily unionized sectors respond most strongly. I construct counterfactual aggregate responses under historical versus contemporary employment weights to assess how the shift toward services has reshaped monetary transmission to labor markets.