IESET.
Hypotheses·labour·wage_inflation_spiral_post_2021_oecd_panel

In the 2021-2024 OECD inflation episode, wage growth lagged price inflation rather than led it — average across OECD economies, real wages fell 2-4% cumulative 2021-2023 before recovering — refuting the wage-price-spiral framing and supporting the "profit-led-then-supply-shock-driven" decomposition (Bivens, Weber, Stiglitz) for the early phase, with wage catch-up only emerging 2023-2024 once inflation peaked.

PARTIALengine/runs/wage_inflation_spiral_post_2021_oecd_panel

PARTIAL — cumulative_effect=+11.75, h=5, p_h=0.126 (above α=0.10)

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

In plain terms, this asks whether covid recovery indicator is actually linked to better or worse nominal wage growth from 2018 to 2024.

plain answer

The evidence is suggestive but not decisive. cumulative_effect=+11.75, h=5, p_h=0.126 (above α=0.10)

why it matters

Labor-market rules often help some workers while risking job loss or slower hiring for others. This test looks for that tradeoff in observable employment or unemployment data.

how the test works

It compares 18 country or place units from 2018 to 2024, using a local projections design, with fixed effects for country and quarter.

what was measured
What changed
  • Covid recovery indicator
What we checked
  • Nominal wage growth
  • Cpi headline yoy
  • Real wage index
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/wage_inflation_spiral_post_2021_oecd_panel
1007550250201820212024USAGBRDEUFRAITAESPNLD
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show nominal_wage_growth across 18 sampled countries over 2018–2024.
The shapes above are stylised — none of the lines are real data.
Placeholder for wage_inflation_spiral_post_2021_oecd_panel. Published chart will be generated from engine/runs/wage_inflation_spiral_post_2021_oecd_panel/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-05-01T07:16:52Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

In the 2021-2024 OECD inflation episode, wage growth lagged price inflation rather than led it — average across OECD economies, real wages fell 2-4% cumulative 2021-2023 before recovering — refuting the wage-price-spiral framing and supporting the "profit-led-then-supply-shock-driven" decomposition (Bivens, Weber, Stiglitz) for the early phase, with wage catch-up only emerging 2023-2024 once inflation peaked.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

OECD-country panel 2019-2024 quarterly. Run bivariate VAR(4) on log nominal wage and log CPI per country, then aggregate. Test Granger direction: does wage growth Granger-cause CPI inflation, or vice versa? Compute cumulative real-wage change 2021-Q1 to 2023-Q4. SUPPORTED if (a) median country shows CPI Granger-causes wage at p<0.10 while wage does NOT Granger-cause CPI, AND (b) median cumulative real-wage change 2021-Q1 to 2023-Q4 is between -2% and -5%. REFUTED if median wage Granger-causes CPI at p<0.10 OR cumulative real wages rose during the inflation peak (positive median real-wage growth 2021-Q1 to 2022-Q4).

formal test & threshold
test:      oecd_wage_cpi_var_granger_2021_2024
threshold: SUPPORTED: CPI->wage Granger p<0.10 in median country AND wage->CPI p>0.10 AND median cumul real wage 2021-Q1 to 2023-Q4 in [-5%, -2%].

Method

Template
local_projections
Fixed effects
country, quarter
Clustering
country
Sample
18 countries · 2018 – 2024
Evidence type
associational

Bivariate VAR(4) per country on log wage and log CPI; Granger-causality test extracted per country and aggregated to median. Real-wage cumulative test as second leg. Pre-registered SUPPORTED outcome (CPI leads wage, real wages fell) is the Bivens/Weber profit-led decomposition; REFUTED is the orthodox-spiral reading.

Data

VariableSourceTransform
nominal_wage_growth
outcome
oecd:OECD.SDD.TPStier 2
pct_change_yoy
cpi_headline_yoy
outcome
oecd:OECD.SDD.TPStier 2
pct_change_yoy
real_wage_index
outcome
oecd:OECD.SDD.TPStier 2
oecd:OECD.SDD.TPStier 2
real_wage_index
ulc_unit_labour_cost
outcome
oecd:OECD.SDD.STAtier 2
pct_change_yoy
covid_recovery_indicator
treatment
constructed:1 from 2021-Q1 onwardtier 5
indicator
oil_price_brent
control
imf_pcps:POILBREtier 1
log_diff
unemployment_rate
control
world_bank_wdi:SL.UEM.TOTL.ZStier 2
level
ny_fed_global_supply_chain_pressure
control
fred:T5YIFRtier 1
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — wage_inflation_spiral_post_2021_oecd_panel

Verdict: PARTIAL — cumulative_effect=+11.75, h=5, p_h=0.126 (above α=0.10)

Pre-registration

  • Claim: In the 2021-2024 OECD inflation episode, wage growth lagged price inflation rather than led it — average across OECD economies, real wages fell 2-4% cumulative 2021-2023 before recovering — refuting the wage-price-spiral framing and supporting the "profit-led-then-supply-shock-driven" decomposition (Bivens, Weber, Stiglitz) for the early phase, with wage catch-up only emerging 2023-2024 once inflation peaked.
  • Falsification rule: OECD-country panel 2019-2024 quarterly. Run bivariate VAR(4) on log nominal wage and log CPI per country, then aggregate. Test Granger direction: does wage growth Granger-cause CPI inflation, or vice versa? Compute cumulative real-wage change 2021-Q1 to 2023-Q4. SUPPORTED if (a) median country shows CPI Granger-causes wage at p<0.10 while wage does NOT Granger-cause CPI, AND (b) median cumulative real-wage change 2021-Q1 to 2023-Q4 is between -2% and -5%. REFUTED if median wage Granger-causes CPI at p<0.10 OR cumulative real wages rose during the inflation peak (positive median real-wage growth 2021-Q1 to 2022-Q4).

Local-projections IRF

  • Method: Jordà local projections (TWFE, country-clustered)
  • Cumulative effect: +11.75
  • Final-horizon p-value: 0.126

| h | β | SE | p | n | |---|---|---|---|---| | 0 | +1.217 | 0.196 | 4.95e-10 | 123 | | 1 | +3.643 | 0.232 | 2.13e-55 | 105 | | 2 | +3.916 | 0.238 | 5.44e-61 | 87 | | 3 | +2.971 | 0.26 | 3.67e-30 | 69 | | 4 | +6.567e-14 | 1.63e-15 | 0 | 51 | | 5 | +1.239e-12 | 8.09e-13 | 0.126 | 34 |

Variables resolved

  • oecd:OECD.SDD.TPS,DSD_PRICES@DF_PRICES_ALL,1.0 → cpi_headline_yoy (outcome, n=2908)
  • oecd:OECD.SDD.TPS,DSD_EARNINGS@DF_AVE_HRLY,1.0; oecd:OECD.SDD.TPS,DSD_PRICES@DF_PRICES_ALL,1.0 → real_wage_index (outcome, n=2908)
  • constructed: 1 from 2021-Q1 onward → covid_recovery_indicator (treatment, n=126)
  • imf_pcps:POILBRE → oil_price_brent (controls, n=648)
  • world_bank_wdi:SL.UEM.TOTL.ZS → unemployment_rate (controls, n=8071)
  • fred:T5YIFR → ny_fed_global_supply_chain_pressure (controls, n=432)

Generated by scripts/run_local_projections.py at 2026-05-01T07:16:52+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Wage-price spiral test on OECD panel. Granger / VAR identification on whether wage YoY leads or lags CPI YoY. Strong null prediction (no spiral) is the SUPPORTED reading.

Authored framework. Read the transparency note.