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Oil price changes and wages: a nonlinear and asymmetric approach

Author

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  • Nyakundi M. Michieka

    (California State University)

  • Richard S. Gearhart

    (California State University)

Abstract

We assess the relationship between oil prices and wages in 15 top oil producing counties in the USA using data between 2001 and 2018. The analysis is conducted at the sectoral level where wages in seven industries are assessed in both the long- and short-run using a panel ARDL model. Asymmetric county level analyses are also conducted using nonlinear ARDL (NARDL) models. Results from the panel indicate that in the long-run, a positive shock to oil prices granger causes wages to increase in all sectors, with the largest (smallest) increase in the manufacturing (service) sector. Short-run coefficients indicate that oil price shocks have the largest effect on resource sector wages. County level results from the NARDL models provide evidence that there is no consistent effect on wages following oil price shocks in the long- and short-run in the overall economy.

Suggested Citation

  • Nyakundi M. Michieka & Richard S. Gearhart, 2022. "Oil price changes and wages: a nonlinear and asymmetric approach," Economic Change and Restructuring, Springer, vol. 55(1), pages 1-71, February.
    • Handle: RePEc:kap:ecopln:v:55:y:2022:i:1:d:10.1007_s10644-020-09314-4
    DOI: 10.1007/s10644-020-09314-4
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    More about this item

    Keywords

    Oil price shocks; Wages; U.S. counties; Asymmetric models;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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