Briefing
How Much Do Labor Costs Affect Prices in Recessions and in Expansions?
Karabarbounis, Marios (2023-05)
Inflation had been quite low in the decade following the Great Recession but surged following the COVID-19 recession. Can labor costs explain this change in the dynamics of inflation? According to recent research, the relatively stable inflation in the last decade indicates a weaker pass-through of labor costs to wages, especially in the goods sector of the economy. The current inflationary episode, however, suggests that the wage-price pass-through may have regained its strength.
Richmond Fed Economic Brief , Volume 23 , Issue 14