Bibliographic summary of the heterogeneous impact of macroeconomic shocks on the labor market
| Article and period analyzed | Model/shocks | Variables VAR | Main results |
|---|---|---|---|
| Carpenter and Rodgers (2004) 1973m9 to 2002m9 (U.S.) | SVAR Zero restriction Identification of: Monetary Policy shocks | Industrial production Inflation (CPI) Commodities index Fed funds Total reserves Employment ratios Unemployment by race | Monetary tightening leads to higher unemployment among the African American population compared to the white population. This difference is not explained by the impact of the shock in different sectors or industries |
| Cavalcanti and Moreira (2015) 2003m1 to 2013m9 (Brazil) | B-FAVAR Sign restrictions Identification of: Monetary Policy Demand Exchange rate shocks | Production Inflation (IPCA) Selic rate Exchange rate Employment ratios by education and age | The monetary shock reduces the likelihood of hiring and firing, exerting a negative effect on aggregate employment. Conversely, the exchange rate shock operates in contrast to the monetary shock increasing the likelihood of both hiring and firing albeit with a neutral aggregate effect. The group with lower educational attainment is the most adversely affected. Demand shock results in a greater likelihood of hiring and employment. Moreover, the likelihood of hiring older workers is higher in response to this shock. Hiring is more sensitive than firing for the shocks analyzed |
| Chaudhuri (2020) 1979m1 to 2007m12 (U.S.) | SVAR Zero restriction Identification of: Monetary Policy shocks | Inflation (CPI) Commodities index Federal Funds Rate Unemployment by education race and gender | Monetary tightening leads to a higher increase in unemployment for workers without higher education. The rise in unemployment among white workers and men is lower after a monetary tightening when compared to other analyzed groups |
| Dolado et al. (2021) 1979m1 to 2016m6 (U.S.) | SVAR Zero restriction Identification of: Monetary Policy shocks | Industrial production Inflation Federal Funds Rate Skill premium employment rate ratio by education | Monetary easing leads to a proportionally greater increase in employment for workers with higher education |
| Thorbecke (2001) 1973m3 to 1996m12 (U.S.) | SVAR Zero restriction Identification of: Monetary Policy shocks | Industrial production Inflation (CPI) Commodities index Federal Funds Rate Reserves Unemployment by Race | Monetary tightening leads to an increase in aggregate unemployment. The increase in unemployment among the white population is significantly lower when compared to Latinos or Americans, almost half the impact |
| Zavodny and Zha (2000) 1972m to 1999m12 (U.S.) | B-SVAR Zero restriction Identification of: monetary policy commodities price unemployment shocks | GDP Inflation Commodities index Money stock (M2) Federal Funds Rate Unemployment by race | Monetary tightening results in increased aggregate unemployment. The disparities in the effects of monetary tightening on unemployment between the African American population and the overall population are not significant. However, the disparities between these two groups are significant when it comes to an aggregate unemployment shock and a commodity price shock, with the African American population being more affected than the overall population |
| Zens et al. (2020) 1978Q1 to 2019Q1 (U.S.) | B-FAVAR Sign restrictions Identification of Monetary Policy shocks | Industrial production Inflation 178 variables (Factors) Unemployment by occupation | Monetary tightening leads to an increase in aggregate unemployment. Occupations involving routine tasks (repetitive and easily replaceable), which require lower skills, are more negatively impacted compared to occupations involving more abstract tasks (high skill jobs) |
| Article and period analyzed | Model/shocks | Variables VAR | Main results |
|---|---|---|---|
| SVAR | Industrial production | Monetary tightening leads to higher unemployment among the African American population compared to the white population. This difference is not explained by the impact of the shock in different sectors or industries | |
| B-FAVAR | Production | The monetary shock reduces the likelihood of hiring and firing, exerting a negative effect on aggregate employment. Conversely, the exchange rate shock operates in contrast to the monetary shock increasing the likelihood of both hiring and firing albeit with a neutral aggregate effect. The group with lower educational attainment is the most adversely affected. Demand shock results in a greater likelihood of hiring and employment. Moreover, the likelihood of hiring older workers is higher in response to this shock. Hiring is more sensitive than firing for the shocks analyzed | |
| SVAR | Inflation (CPI) | Monetary tightening leads to a higher increase in unemployment for workers without higher education. The rise in unemployment among white workers and men is lower after a monetary tightening when compared to other analyzed groups | |
| SVAR | Industrial production | Monetary easing leads to a proportionally greater increase in employment for workers with higher education | |
| SVAR | Industrial production | Monetary tightening leads to an increase in aggregate unemployment. The increase in unemployment among the white population is significantly lower when compared to Latinos or Americans, almost half the impact | |
| B-SVAR | GDP | Monetary tightening results in increased aggregate unemployment. The disparities in the effects of monetary tightening on unemployment between the African American population and the overall population are not significant. However, the disparities between these two groups are significant when it comes to an aggregate unemployment shock and a commodity price shock, with the African American population being more affected than the overall population | |
| B-FAVAR | Industrial production | Monetary tightening leads to an increase in aggregate unemployment. Occupations involving routine tasks (repetitive and easily replaceable), which require lower skills, are more negatively impacted compared to occupations involving more abstract tasks (high skill jobs) |
Note(s): B-Bayesian procedure
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