TY - JOUR
T1 - Where do jobs go when oil prices drop?
AU - Herrera, Ana María
AU - Karaki, Mohamad B.
AU - Rangaraju, Sandeep Kumar
N1 - Publisher Copyright:
© 2016
Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2017/5
Y1 - 2017/5
N2 - In this paper, we estimate a factor augmented vector autoregressive (FAVAR) model to investigate the effect of oil price shocks on total private job flows as well as on industry-level job creation and destruction. Following an unexpected oil price drop in the first year, we find that in oil and gas extraction and support activities for mining exhibit a reduction in job creation and an increase in job destruction. Instead, industries in construction, manufacturing and services exhibit an increase in the net employment change. An unexpected decline in the real oil price slows down the pace of gross job reallocation. We demonstrate that the increase (decrease) in private job destruction (creation) observed during the first year is primarily driven by the response of closing (expanding) firms in services and manufacturing.
AB - In this paper, we estimate a factor augmented vector autoregressive (FAVAR) model to investigate the effect of oil price shocks on total private job flows as well as on industry-level job creation and destruction. Following an unexpected oil price drop in the first year, we find that in oil and gas extraction and support activities for mining exhibit a reduction in job creation and an increase in job destruction. Instead, industries in construction, manufacturing and services exhibit an increase in the net employment change. An unexpected decline in the real oil price slows down the pace of gross job reallocation. We demonstrate that the increase (decrease) in private job destruction (creation) observed during the first year is primarily driven by the response of closing (expanding) firms in services and manufacturing.
KW - Job flows
KW - Job reallocation
KW - Oil prices
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U2 - 10.1016/j.eneco.2016.02.006
DO - 10.1016/j.eneco.2016.02.006
M3 - Article
AN - SCOPUS:84962556793
VL - 64
SP - 469
EP - 482
ER -