SUERF Policy Brief Restoring the purchasing power of wages: The role of job mobility and search

SUERF Policy Brief, No 1033 1 Restoring the purchasing power of wages: The role of job mobility and search* Introduction Understanding wage adjustments following the inflation surge in 2022 is crucial for understanding the likely persistence of the inflation shock and for assessing more medium-term risks to price stability. [...] Such responses were particularly high in Germany and Italy (15.2% and 15.8% respectively over the same period).1 In this policy brief, we explore the extent to which the data support a role for job search and job mobility of existing employees in understanding the process of wage adjustment after a period of high inflation. [...] How did job search patterns change following the inflation shock? Focusing on the period after January 2022 can help assess the possible response of job search and job mobility following the surge in euro area inflation in the first half of 2022. [...] The CES evidence thus highlights how an active monitoring of euro area job mobility can contribute to the understanding of the wage-price adjustment process in the wake of a large inflationary shock comparable to that experienced by the euro area in 2022 and 2023. [...] The views expressed are those of the authors and not necessarily those of the institutions the authors are affiliated with.