Arbeitspapier

Oil price shocks and labor market fluctuations

We examine the impact of real oil price shocks on labor market flows in the US We first use smooth transition regression (STR) 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 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 US.

Language
Englisch

Bibliographic citation
Series: IZA Discussion Papers ; No. 5096

Classification
Wirtschaft
Investment; Capital; Intangible Capital; Capacity
Business Fluctuations; Cycles
Labor Turnover; Vacancies; Layoffs
Unemployment: Models, Duration, Incidence, and Job Search
Subject
oil prices
unemployment
vacancies
business fluctuations

Event
Geistige Schöpfung
(who)
Ordóñez, Javier
Sala, Héctor
Silva, José Ignacio
Event
Veröffentlichung
(who)
Institute for the Study of Labor (IZA)
(where)
Bonn
(when)
2010

Handle
URN
urn:nbn:de:101:1-201008117756
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Ordóñez, Javier
  • Sala, Héctor
  • Silva, José Ignacio
  • Institute for the Study of Labor (IZA)

Time of origin

  • 2010

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