Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/305711 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17269
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We study the link between expected inflation and wages using novel panel data from German firms and employees. We find that pass-through—the percentage point change in wage growth given a one percentage point change in expected inflation—is small: 0.11–0.17 for firms and 0.03–0.07 for employees. Utilizing variation in the coverage length of collective agreements, we estimate that passthrough at the intensive margin is 1.4-2 times larger than average pass-through, highlighting the importance of wage rigidities for pass-through. Pass-through also rises with the bargaining power of employees. At the extensive margin, expected inflation has little effect on additional wage negotiations.
Subjects: 
wage expectations
inflation
pass-through
wage-price spirals
bargaining
firms
employees
survey data
JEL: 
E24
E31
D84
Document Type: 
Working Paper

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