Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/44195
Authors: 
Ordóñez, Javier
Sala, Héctor
Silva, José Ignacio
Year of Publication: 
2010
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5096
Abstract: 
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.
Subjects: 
oil prices
unemployment
vacancies
business fluctuations
JEL: 
E22
E32
J63
J64
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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