TY - JOUR
TI - Segmented labor markets and monetary policy
DO - https://doi.org/doi:10.7282/T32R3TNW
PY - 2015
AB - This dissertation examines the impact of a segmented labor market on aggregate dynamics and discusses optimal monetary policy. The first chapter investigates whether differentials in labor market variables in segmented labor markets have an aggregate effect. I find a mechanism by which a segmented labor market model generates stickier aggregate nominal wages and thus more volatile output, employment ratio and unemployment rate. In the second chapter, I estimate the extended version of the model using a typical Bayesian estimation method in which the model incorporates several features that are common in medium-scale New Keynesian DSGE Models. The estimation results confirm the results obtained by the calibrated model of the first chapter. In particular, the estimates for the labor supply and demand elasticity of low-skilled workers are greater than those of high-skilled workers. In the third chapter, I discuss an optimal monetary policy, taking into account income inequality. The model shows that a tight monetary policy leads to an increase in income inequality. This increase in inequality induces stickier aggregate nominal wages. I also find that the income inequality poses a policy trade-off with traditional objectives. A quantitative analysis shows that a monetary policy that concerned aggregate variables only causes a larger welfare loss after idiosyncratic productivity shocks.
KW - Economics
KW - Market segmentation
KW - Labor market
LA - eng
ER -