Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161847
Authors: 
Kehrig, Matthias
Ziebarth, Nicolas L.
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6408
Abstract: 
We find that oil supply shocks decrease average real wages, particularly skilled wages, and increase wage dispersion across regions, particularly unskilled wage dispersion. In a model with spatial energy intensity differences and nontradables, labor demand shifts, while explaining the response of average wages to oil supply shocks, have counterfactual implications for the response of wage dispersion. Only an additional response in labor supply can explain this latter fact highlighting the importance of general equilibrium effects in a spatial context. We provide additional empirical evidence of regionally directed worker reallocation and housing prices consistent with our spatial model. Finally, we show that a calibrated version of our model can quantitatively match the estimated effects of oil supply shocks.
Subjects: 
wage dispersion
labor reallocation
skill heterogeneity
oil prices
JEL: 
E24
J24
J31
J61
Document Type: 
Working Paper

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