Journal article
Crude substitution: The cyclical dynamics of oil prices and the skill premium
Journal of monetary economics, Vol.56(3), pp.409-418
2009
DOI: 10.1016/j.jmoneco.2009.03.002
Abstract
At the business cycle frequency, energy prices and the skill premium display a strong, negative correlation. This fact is robust to different de-trending procedures. Identifying exogenous shocks to oil prices using the Hoover–Perez [1994. Post hoc ergo propter once more: an evaluation of ‘Does monetary policy matter?’ in the spirit of James Tobin. Journal of Monetary Econonmics 34, 47–73] dates, shows that the skill premium falls in response to such a shock. The estimation of the parameters of an aggregate technology that uses, among other inputs, energy and heterogeneous skills, demonstrates that capital–skill and capital–energy complementarity are responsible for this correlation. As energy prices rise, the use of capital decreases and the demand for unskilled labor—relative to skilled labor—increases, lowering the skill premium.
Details
- Title: Subtitle
- Crude substitution: The cyclical dynamics of oil prices and the skill premium
- Creators
- Linnea Polgreen - University of IowaPedro Silos - Federal Reserve Bank of Atlanta
- Resource Type
- Journal article
- Publication Details
- Journal of monetary economics, Vol.56(3), pp.409-418
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.jmoneco.2009.03.002
- ISSN
- 0304-3932
- eISSN
- 1873-1295
- Language
- English
- Date published
- 2009
- Academic Unit
- Economics; Pharmacy Practice and Science
- Record Identifier
- 9984366022702771
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