Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70728
Authors: 
Polgreen, Linnea
Silos, Pedro
Year of Publication: 
2008
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2006-14a
Abstract: 
Higher oil-price shocks benefit unskilled workers relative to skilled workers: At the business-cycle frequency, energy prices and the skill premia display a strong, negative correlation. We assess the robustness of this negative correlation using several methods and data sources, including sector-level data. We find that the negative correlation is robust to different de-trending procedures, and the wages of unskilled workers in energy-intensive industries have a larger positive correlation with oil prices. We also estimate the parameters of an aggregate technology, which uses, among other inputs, energy and heterogeneous skills. We find that both capital-skill and capital-energy complementarity are responsible for this correlation pattern. As energy prices rise, the use of capital decreases and the demand for unskilled labor relative to skilled labor increases, resulting in lower skill premia.
Subjects: 
skill heterogeneity
energy prices
business cycles
capital-skill complementarity
JEL: 
E24
E32
J24
Document Type: 
Working Paper

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