Unemployment shocks have less impact on wages than previously thought.
The study shows that when looking at wages and unemployment in Europe, there is a bias in how we estimate wage rigidity. Wages don't change as much in response to unemployment at the regional level compared to the country level. This is because regions with low unemployment have more stable wages, making it seem like wages are more flexible overall. In reality, wages are less responsive to changes in unemployment than we think. This means that if the government tries to boost the economy with more spending, it might not lead to as much wage inflation as expected.