Global Supply Chains and Policy Shocks: Implications for Sectoral Wages

ABSTRACT This paper investigates the heterogeneous transmission of global supply chain disruptions, trade policy uncertainty, tariffs and monetary policy shocks to United States sectoral wages from March 2007 to June 2025. Estimating a Bayesian structural vector autoregression model for major economic sectors, we quantify the dynamic wage responses and calculate the forecast error variance decompositions to identify the primary drivers of wage volatility. The empirical estimates document substantial sectoral heterogeneity. Global supply chain disruptions create significant inflationary pressures on wages, heavily concentrated within service and logistics industries. In contrast, trade policy uncertainty acts as a broad deflationary force across the labour market. Tariff implementations generate sharply divided outcomes between protected and exposed sectors. Additionally, contractionary monetary policy has its most severe dampening effects on wages in interest‐rate‐sensitive, goods‐producing industries. By jointly evaluating these structural shocks at a detailed level, this study demonstrates that aggregate macroeconomic analyses hide critical labour market dynamics, providing highly specific estimates of the distinct forces dictating sectoral wage growth.