Documents ECB Research Bulletin 11 results

"We use information about key events in Germany relevant for wage negotiations, like labour strikes and the introduction of a minimum wage, to pinpoint changes in bargaining power between workers and employers. We find that such wage bargaining “shocks” are important drivers of unemployment and inflation, that their effect on wages is almost fully reflected in prices, and that they reduce the vacancy rate and increase firms' profits and the labour share of income in the short run, but not in the long run."

"In the aftermath of the COVID-19 pandemic, the euro area labour market showed remarkable resilience despite weak economic growth and various challenges, including supply chain disruptions, the energy crisis and geopolitical tensions. The relative strength of the labour market compared with economic activity led to a marked decline in measures of labour productivity. Factors such as reduced real wages, increased profit margins, lower average hours worked and strong labour force growth contributed to favourable labour market dynamics, encouraging firms to hire or retain workers. Looking ahead, there are signs of easing in the labour market as some of the factors sustaining employment subside, aligning labour market dynamics more closely with economic activity. Nevertheless, structural issues, such as declining average hours worked and labour force dynamics, may persist."

"Many countries have implemented macroprudential policies. The aims are twofold: first, to render the financial system more resilient to shocks and, second, to prevent booms and busts in the financial system in response to economic cycles. This article provides theoretical and empirical evidence which shows the positive impact that these measures have on financial stability, as well as the gains in economic growth derived from a stronger financial system."

"This article reviews the impact of Brexit on recent developments in UK trade and labour markets. While it will take some time for the full impact of Brexit to emerge and the coronavirus (COVID-19) pandemic is a confounding factor, the available data allow a first stocktake of the effects of Brexit. While significant uncertainties regarding the precise magnitudes remain, the available evidence suggests that Brexit has been a drag on UK trade and has contributed to a fall in labour supply."

"Regulation to control carbon emissions forces firms to think hard about their optimal policy for carbon management. We set out a unified approach to studying the trade-offs posed by carbon pricing for firms and how they should therefore best respond. Our model reveals that although carbon pricing curtails firms' carbon emissions, polluting firms tilt their green investment mix towards more immediate yet short-lived options – such as solely reducing emissions (abatement) instead of investing in green innovation – as it becomes costlier to comply. Under emissions trading systems, larger balances of carbon credits dampen firms' efforts to reduce their carbon emissions. Our analysis reveals that carbon regulation does not necessarily decrease shareholder value if firms are sufficiently committed to reducing their carbon footprint."

"To help avert severe economic damage from climate change, the European Union (EU) has taken measures aimed at reducing greenhouse gas (GHG) emissions to net zero by 2050. The EU's net-zero goal is set out in the European Green Deal, and comprehensive measures are outlined in the EU's Fit for 55 package.[2] These aim to reduce GHG emissions by 55% by 2030 (compared to 1990 levels). The Fit for 55 package includes carbon price increases and regulatory measures and foresees massive green investments..."

"In January 2023 the ECB published a set of climate-related statistical indicators on its website for the first time, covering sustainable finance, carbon emissions and physical risks. These climate-related indicators, which are still under different stages of development, aim to shed light on climate change risks facing the financial sector in the euro area and to support policymakers and investors in developing effective strategies to address these challenges. Climate change also has potential implications for central banks regarding their price stability mandates, financial stability aims and, in many cases, prudential supervision of banks. This box gives a brief overview of the climate-related indicators, including the rationale behind them and their caveats...."

"In the context of elevated inflation in the euro area (despite recent declines), it is useful to look at the response of public wages to gauge further pressures on private sector wages and core inflation. While the public sector accounts for only about one-fifth of the economy-wide compensation of employees in the euro area, it can provide a relevant signal for wage negotiations in the private sector. Public wage growth can thus have a bearing on inflation through both a direct channel (aggregate demand) and an indirect channel (as a signal for changes in private sector compensation). This box provides an update on previous analyses of public wage projections for the euro area, including as regards the institutional features that govern public wage-setting across euro area countries.."

"Recent advances in artificial intelligence have been met with anxiety about the future of jobs. This article examines the link between AI-enabled technologies and employment shares across 16 European countries, finding that occupations potentially more exposed to AI-enabled technologies increased their employment share during the period 2010-19. This has been particularly the case for occupations with a relatively higher proportion of younger and skilled workers."