Oil Shocks and Labor Market Developments

IMF Working Papers, July 18, 2025

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Examines how oil shocks shape labor market outcomes across 89 countries from 1975 to 2022.
Uses a high-frequency oil supply shock series and a rich panel of quarterly labor market data.
Shocks raising oil prices trigger sharp and persistent employment losses, particularly in:
- oil-importing countries,
- oil-intensive sectors,
- among male workers.
Delayed but enduring employment declines also emerge in:
- oil-moderate sectors,
- among female workers.
Employment gains in oil-exporting countries, and following expansionary supply shocks, are comparatively modest.
Labor force participation responds less consistently, with higher variability across contexts.
Concludes that oil shocks transmit unevenly through labor markets, producing lasting impacts across countries, sectors, and demographic groups that extend beyond short-term macroeconomic fluctuations.

Cross-country panel analysis covering 89 countries over the period 1975 to 2022.
Leverages a high-frequency oil supply shock series for identification.
Employs quarterly labor market data to trace dynamics of employment and labor force participation.

Subject: Commodities; Economic theory; Labor; Labor force participation; Labor markets; Oil; Oil production; Production; Supply shocks.
Keywords include: cross-country labor adjustment; employment gain; employment heterogeneity; Global; high-frequency identification; high-frequency oil supply shock series; Labor force participation; labor market; labor market development; Labor markets; Oil; Oil production; oil shock; oil supply shocks; oil-importing country; Supply shocks; trigger sharp.