Elton Beqiraj
Sapienza University of Rome, Department of Economics and Law
Stefano Di Bucchianico
University of Salerno, Department of Economics and Statistics
Mario Di Serio
University of Salerno, Department of Economics and Statistics
Michele Raitano
Sapienza University of Rome, Department of Economics and Law
Abstract
This study examines the impact of monetary policy on wage inequality in Italy from 1999m1 to 2018m12, using a newly assembled dataset based on high-frequency administrative data on private-sector employees from the Italian Social Security Institute (INPS). By applying the Smooth Local Projection (SLP) method, we derive the impulse responses to exogenous monetary policy shocks of average wages and of the Gini index of wage inequality and other indicators of the wage distribution. Our findings show that expansionary monetary policy significantly reduces wage inequality while stimulating economic activity. Furthermore, distinguishing workers’ subgroups according to sector of activity, occupation and firm’s size, we find that expansionary monetary policy decreases wage inequality both 'between' and 'within' subgroups
Keywords
Monetary policy shocks, Wage inequality, Italian data, Earnings heterogeneity, Labour market
Jel Codes
D63, E50, E52
