Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/306804 
Year of Publication: 
2024
Series/Report no.: 
LEM Working Paper Series No. 2024/30
Publisher: 
Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM), Pisa
Abstract: 
We estimate how energy shocks affect the functional distribution of income. Using structural vector autoregressions identified with the oil supply news instrument proposed by Kanzig (2021), we find that an increase in oil prices leads to a substantial and long-lasting decline in the wage share. Real aggregate wage income is significantly impacted, with a considerable part of this decline stemming from distributive dynamics. We also investigate possible asymmetries in the response to oil supply shocks, finding that the wage share is more sensitive to negative shocks than to positive ones. This suggests that wage earners lose from oil price hikes more than they benefit from declines.
Subjects: 
Oil shocks
Income distribution
proxy-SVAR
Asymmetries
JEL: 
C32
E25
E31
E32
Q43
Document Type: 
Working Paper

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