Affiliation:
1. Department of Economics, Duke University, 237 Social Sciences, Box 90097, Durham, NC 27708)
2. Department of Economics, Auburn University, 0332 Haley Center, 351 W. Thach Concourse, Auburn, AL 36849 and NBER (e-mail: )
Abstract
We find that oil supply shocks decrease average real wages, particularly skilled wages, and increase wage dispersion across regions, particularly unskilled wage dispersion. In a model with spatial energy intensity differences and nontradables, labor demand shifts, while explaining the response of average wages to oil supply shocks, have counterfactual implications for the response of wage dispersion. Only an additional response in labor supply can explain this latter fact, highlighting the importance of general equilibrium effects in a spatial context. We provide additional empirical evidence of regionally directed worker reallocation and housing prices consistent with our spatial model. Finally, we show that a calibrated version of our model can quantitatively match the estimated effects of oil supply shocks. (JEL E24, J22, J23, J24, J31, Q35, R23)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Cited by
6 articles.
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