TY  - RPRT
        AU  - Ordóñez, Javier
AU  - Sala, Hector
AU  - Silva, José I.
        TI  - Oil Price Shocks and Labor Market Fluctuations
        PY  - 2010/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5096
        UR  - https://www.iza.org/publications/dp5096
        AB  - We examine the impact of real oil price shocks on labor market flows in the U.S. 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 U.S.
        KW  - unemployment
KW  - oil prices
KW  - business fluctuations
KW  - vacancies
        ER  -