Economics, Econometrics and Finance
4 years ago

Labor cost inflation drives price inflation in the Euro Area.

Central Banking, Analysis, and Economic Policies Book Series
The link between labor cost inflation and price inflation in the Euro Area
Elena Bobeica, Matteo Ciccarelli, Isabel Vansteenkiste

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Labor cost inflation, which is the increase in wages adjusted for productivity, is believed to be a major factor driving price inflation. When wages rise faster than productivity, it puts pressure on prices to go up. This study explores the relationship between labor cost inflation and price inflation in the Euro Area.