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US employment polarisation tempers worker power and inflation
Will tight labour markets in the US contribute to growing inflation? This is a growing concern among a handful of economists and commentators. Last week, the Wall Street Journal fretted that there is a risk of ‘a tight labour market, with demand for workers far outstripping the supply, generat[ing] wage growth that keeps inflation above the Fed’s 2% target.’ At the centre of this problem is the labour market dynamics represented in the Phillips curve. In economics, the Phillips curve describes the trade-offs between inflation and unemployment. As unemployment gets lower and labour markets become tighter, ... (full story)