Monetary policy and wage inequality in South Africa |
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| Affiliation: | 1. School of Management, Xi''an Jiaotong University, Xi''an, China;2. Department of Economics, Cornell University, New York, United States;1. OFI Asset Management, 22, rue Vernier, 75017 Paris, France;2. University of Grenoble Alps – CERAG, 150, rue de la Chimie, 38400 Saint Martin d''Hères, France;1. Business School, Universidad Católica de la Santísima Concepción, Alonso de Ribera 2850, Concepción, Chile;2. Business School, Middlesex University London, The Burroughs, Hendon, London NW4 4BT, United Kingdom;3. Birmingham Business School, University of Birmingham, Edgbaston, Birmingham, B15 2TT, United Kingdom;4. Monetary Policy and Economic Analysis Department, National Bank of Ukraine, Kyiv, Ukraine;5. Department of Economics, National University of Ostroh Academy, Ostroh, Ukraine;1. School of Economics, Huazhong University of Science and Technology, Wuhan 430074, Hubei, China;2. School of Finance, Zhongnan University of Economics and Law, Wuhan 430074, Hubei, China |
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| Abstract: | The distributive consequences of monetary policy have been researched only recently and almost entirely in advanced economies. This paper sheds light on the effect of conventional monetary policy shocks on the wage distribution in South Africa, where inequality – mostly driven by the segmented labour market – remains a large issue. Impulse response functions estimated from local projections show that the wage distribution significantly worsens in response to monetary shocks. Wages in the top half of the distribution, that benefit from unanticipated expansions, are less responsive to surprise contractions, remaining protected by skill-biased technology and strong labour unions. |
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