Oil price shocks and labor market fluctuations

Javier Ordóñez Montfort, Hector Sala, J I Silva

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

We examine the impact of real oil price shocks on labor market flows in the U.S. We first use smooth transition regression (STAR) models to investigate to what extent oil prices can be considered as a driving force of labor market fluctuations. Then we develop and calibrate a modified version of Pissarides' (2000) model with energy costs, which we simulate in response to shocks mimicking the behavior of the actual oil price shocks. We find that (i) these shocks are an important driving force of job market flows; (ii) the job finding probability is the main transmission mechanism of such shocks; and (iii) they bring a new amplification mechanism for the volatility of the labor market, and should thus be seen as complementary of labor productivity shocks. Overall we conclude that shocks in oil prices cannot be neglected in explaining cyclical labor adjustments in the U.S.
Original languageEnglish
Pages (from-to)89-118
Number of pages30
JournalEnergy Journal
Volume32
Issue number3
DOIs
Publication statusPublished - 2011

Fingerprint Dive into the research topics of 'Oil price shocks and labor market fluctuations'. Together they form a unique fingerprint.

Cite this