Wage and Inflation Dynamics in Denmark
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Summary:
Nominal wage growth in Denmark has so far been modest and outpaced by high inflation, putting real wage growth in negative territory. Amid still-tight labor markets, this has raised concerns about wage pressures going forward and the eventual impact on inflation. The analysis suggests that wage formation in Denmark has historically been partly backward-looking, and economic slack also has played a role. Given these, high inflation realized thus far and the tightness in the labor market implies that wage pressures are expected to remain elevated in the near term. Some of these wage pressures, in turn, are expected to be passed on to core inflation, sustaining high inflation. Thus, determined policies to fight inflation are important.
Series:
Selected Issues Paper No. 2023/052
Subject:
Inflation International organization Labor Labor markets Monetary policy Prices Real wages Wage dynamics Wages
Frequency:
Regular
English
Publication Date:
July 19, 2023
ISBN/ISSN:
9798400251924/2958-7875
Stock No:
SIPEA2023052
Format:
Paper
Pages:
16
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