Working Papers
The Effect of Oil News Shocks on Job Creation and Destruction (with Ana María Herrera) [link]
Using data from the Annual Survey of Manufactures (ASM) and the Census of Manufacturing (CMF), we construct quarterly measures of job creation and destruction by 3-digit NAICS industries spanning from 1980Q3-2016Q4. These long series allow us to address three questions regarding the effect of oil news shocks. What is the average effect of oil news shocks on sectoral labor reallocation? What characteristics explain the observed heterogeneity in the average responses across industries? Has the response of US manufacturing changed over time? We find evidence that oil news shocks exert only a moderate effect on total manufacturing net employment growth but lead to a significant increase in job reallocation. However, we find a high degree of heterogeneity in responses across industries. We then show that the cross-industry variation in the sensitivity of net employment growth and excess job reallocation to oil news shocks is related to differences in energy costs, the rate of energy to capital expenditures, and the share of mature firms in the industry. Finally, we illustrate how the dynamic response of sectoral job creation and destruction to oil news shocks has declined since the mid-2000s.
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.