Browsing by Author "Costa, Manuel Filipe Ferreira"
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- Monetary policy and wages : evidence from the Portuguese labor marketPublication . Costa, Manuel Filipe Ferreira; Reis, HugoThis paper examines the impact of monetary policy on wage dynamics in Portugal, focusing on firm heterogeneity, financial constraints, and skill premium effects. Using matched employeremployee and firm financial data from 2004 to 2022, I analyze how monetary easing influences wage distribution across different firms and workers. The sample is divided between conventional monetary policy (2004 3 2013) and unconventional monetary policy (2014 3 2022) to assess differences in transmission mechanisms. The findings indicate that monetary easing leads to stronger wage growth, particularly in small and young firms, which are typically financially constrained. Furthermore, I document a rise in the skill premium, as wage gains are more pronounced for high-skilled workers than for lowskilled workers. Additionally, I find evidence of a back-loaded wage mechanism, where firms prioritize wage increases for long-term employees during expansionary periods. These results highlight the central role of financial constraints in shaping wage-setting behavior and the uneven distributional effects of monetary policy. The findings have important policy implications, particularly in balancing support for financially constrained firms with concerns about inflationary pressures on real wages. Importantly, the analysis employs Shadow Rates to capture the effects of both conventional and unconventional monetary policy, providing a robust framework for assessing policy transmission in a heterogeneous firm environment.