Labor Markets, Financial Crises, and Inflation: Jobless and Wageless Recoveries*

Staff working paper 2026-31 (English) Guillermo Calvo, Emilio Colombi, Fabrizio Coricelli, Pablo Ottonello September 2026 Available as: PDF

We document the macroeconomic patterns that characterize labor market recovery from financial crises. Using a sample of postwar recession episodes from around the world, we show that financial crises are typically followed by jobless recoveries, with a sluggish recovery in employment relative to output. A departure from this empirical regularity occurs in emerging-market crises with high inflation, which feature strong employment recoveries but persistent declines in real wages and result in “wageless recoveries.” Our findings highlight the central role of financial components in labor input costs and nominal wage rigidities in shaping labor market dynamics following economic crises.

Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E3, E31, E4, E44, F, F3, F32 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting

DOI: https://doi.org/10.34989/swp-2026-31