Working Papers
The Effect of OPEC News on Job Creation and Destruction (with Ana María Herrera) [link]
Using confidential establishment-level data from the Annual Survey of Manufactures and the Census of Manufactures, we study how job creation and destruction in US manufacturing respond to OPEC news. We identify the shock with a quarterly Proxy-VAR that implements the corrections proposed by Kilian (2024) and conduct inference that is robust to weak instruments. At the quarterly frequency, OPEC news behaves like a flow-demand shock. First, the aggregate response is small and imprecisely estimated, as aggregation across industries obscures offsetting movements in job creation and destruction. Second, behind this muted response lies considerable heterogeneity across industries, with the motor vehicle industries bearing the brunt of the adjustment. Lastly, panel local projections show that the heterogeneity is systematically related to industry characteristics such as energy intensity, capital expenditures per worker, establishment size, and the share of mature establishments.
This paper investigates the asymmetric response of gasoline prices to changes in input costs, otherwise known as the rockets and feathers hypothesis. Using daily data for Western Australia, I estimate a multi-level error correction model (ECM) to investigate the relationship between upstream and downstream prices. Estimation results for the full sample uncover evidence of asymmetry in the long-run relationships between crude oil and pay-at-pump prices as well as wholesale and pay-at-pump prices, but no evidence in the short-run dynamics. Furthermore, the fact that firms adopt a uniform price cycle within the sample allows me to explore how changes in pricing patterns and market institutions affect the ECM estimates. Indeed, evidence of rockets and feathers is found for the pre-tacit collusion sample but not after firms adopt a uniform price cycle.
Oil Shock and Watershed: The 1974 Recession and the Labor Market Fortunes of Low-Skill American Males (with Ana María Herrera and Geoffrey Williams)
We investigate the long-term decline in employment and earnings of unskilled young men since 1973, specifically looking at the effect of structural changes brought about by the early 1970’s oil price shocks. Using county level data from the County Business Patterns and the Local Area Personal Income (LAPI), we follow Autor, Dorn, and Hanson (2016) and combine variation at the industry and commuting zone level to identify the long-run impact of the oil shocks on key demographic groups. Initial results show that our model works very well to predict changes in the labor market and provide a solid framework for inquiring into the mechanisms driving the changes in long-run labor outcomes.