Abstract
This paper aims to clarify the relationship between monetary policy shocks and wage inequality. We emphasize the relevance of within- and between-wage-group inequalities in explaining total wage inequality in the USA. Relying on the quarterly data for the period 2000–2020, our analysis shows that racial disparities explain 12% of observed total wage inequality. Subsequently, we examine the role of monetary policy in wage inequality. We do not find compelling evidence that shows that monetary policy plays a role in exacerbating the racial wage gap. However, there is evidence that accommodative monetary policy plays a role in magnifying between-group wage inequalities but the impact occurs after 2008.
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