Monetary policy and wage inequality in South Africa

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Monetary policy and wage inequality in South Africa

Merrino, Serena; (2022) Monetary policy and wage inequality in South Africa. Emerging Markets Review , 53 , Article 100911. 10.1016/j.ememar.2022.100911. Green open access

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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.

Type:	Article
Title:	Monetary policy and wage inequality in South Africa
Open access status:	An open access version is available from UCL Discovery
DOI:	10.1016/j.ememar.2022.100911
Publisher version:	https://doi.org/10.1016/j.ememar.2022.100911
Language:	English
Additional information:	This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords:	Inequality, Labour market, Local projections, Monetary policy, South Africa
UCL classification:	UCL UCL > Provost and Vice Provost Offices > UCL SLASH > SSEES UCL > Provost and Vice Provost Offices > UCL SLASH
URI:	https://discovery.ucl.ac.uk/id/eprint/10148586