Quotation Zens, Gregor, Böck, Maximilian, Zörner, Thomas. 2020. The heterogeneous impact of monetary policy on the US labor market. Journal of Economic Dynamics & Control. 119




We empirically investigate the role of central banks in the context of heterogeneous labor markets, jobless recoveries and job polarization. Specifically, we estimate the effect of monetary policy on the US labor market using disaggregated time series based on large scale survey data. The impact of interest rate changes on unemployment in 32 occupation groups is explored in a Bayesian factor-augmented vector autoregression framework. The results suggest largely heterogeneous impacts across various occupation groups. This heterogeneity can be explained by differential task profiles of the workers in their respective occupations. Workers with tasks that are easily automated or offshored as well as workers at the bottom of the skill distribution are disproportionately affected following a monetary policy shock. This implies that labor market participants that are highly vulnerable to structural developments such as skill-biased technological change and the globalization of labor markets are also most sensitive to conventional monetary policy measures. From a policy perspective, we conclude that central banks are unlikely to be able to take on a stabilizing role in the context of labor market polarization.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of Economic Dynamics & Control
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, INF-A, STRAT-A, VW-B, WH-A
Language English
Title The heterogeneous impact of monetary policy on the US labor market
Volume 119
Year 2020
Reviewed? Y
DOI https://doi.org/10.1016/j.jedc.2020.103989
Open Access Y
Open Access Link https://www.sciencedirect.com/science/article/pii/S0165188920301573
JEL C11, C32, E24, E52


Modeling and forecasting exchange rates in an unified econometric framework
Zens, Gregor (Details)
Böck, Maximilian (Details)
Zörner, Thomas (Details)
Institute for Macroeconomics IN (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
1145 Time series analysis (Details)
5323 Econometrics (Details)
5335 Political economic theory (Details)
5371 Macroeconomics (Details)
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