Journal Article

Labor Market Dynamics During the 2021-24 Inflation Surge


Abstract: This paper revisits the common interpretation that the surge in the vacancy-tounemployment ratio during the 2021–24 inflation episode primarily reflected an overheated labor market. Instead, I argue that the increase in vacancies relative to unemployment was largely driven by falling real wages and a rise in job-to-job transitions, as workers sought to recover lost purchasing power, rather than by broad-based labor market overheating.

JEL Classification: E43; E52;

https://doi.org/10.29338/ph2025-03

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Provider: Federal Reserve Bank of Atlanta

Part of Series: Policy Hub

Publication Date: 2025-06-26

Volume: 2025

Issue: 3

Order Number: 2025-3