Do Rising Labor Costs Trigger Higher Inflation?
6 Pages Posted: 11 Jul 2007
Date Written: September 1997
The evidence that developments in compensation growth lead overall CPI inflation has thus far been inconclusive. This study, however, sheds new light on the relationship between labor costs and price inflation. By breaking down compensation and prices into their various components, the author finds that compensation growth in the service-producing segment of the private sector can help predict prices for a specific group of services.
Keywords: labor costs, price inflation, service sector
JEL Classification: J3, E3
Suggested Citation: Suggested Citation