What the study found
The study finds that unexpected increases in the price level can encourage workers to move from one job to another because nominal wage stickiness, meaning wages do not adjust quickly in dollar terms, limits wage responses. The authors also report that this pattern is associated with higher vacancies, lower real wages, and an apparent tight labor market during inflationary periods.
Why the authors say this matters
The authors conclude that the rise in the vacancy-to-unemployment rate should not automatically be read as a sign of a tight labor market during inflationary periods. They suggest policymakers and academics should look at multiple labor market indicators together before drawing that conclusion.
What the researchers tested
The researchers developed a model that combines modern theories of labor market flows with nominal wage rigidities. They calibrated the model using data from 2021 to 2024 and also examined historical data on inflation, vacancies, and the Beveridge curve, which relates job vacancies to unemployment.
What worked and what didn't
The calibrated model jointly matches aggregate and cross-sectional trends in worker flows and wages during the 2021–2024 period. The authors also find that earlier high-inflation periods were associated with rising vacancies and upward shifts in the Beveridge curve.
What to keep in mind
The abstract does not describe specific limitations beyond the scope of the model and the periods studied. The historical pattern and the 2021–2024 results are presented as findings from the model and data analyzed in the paper.
Key points
- Unexpected inflation can push workers toward job-to-job transitions when wages are sticky.
- The model links inflation with higher vacancies and lower real wages.
- The calibrated model matches worker-flow and wage trends from 2021 to 2024.
- Historical high-inflation periods were also associated with upward shifts in the Beveridge curve.
- The authors caution against reading a higher vacancy-to-unemployment rate as simple evidence of a tight labor market during inflation.
Disclosure
- Research title:
- Inflation is linked to more job moves and higher vacancies
- Authors:
- Hassan Afrouzi, Andres Blanco, Andres Drenik, Erik Hurst
- Institutions:
- Booth University College, Center for Economic and Policy Research, Federal Reserve Bank of Atlanta, The University of Texas at Austin
- Publication date:
- 2026-01-28
- DOI:
- 10.1093/qje/qjag007
- OpenAlex record:
- View
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