{
  "title": "The Employment and Wage Effects of Oil Price Changes: A Sectoral Analysis",
  "publication": "IMF Working Papers, April 1, 1995",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082",
  "overlayPath": "/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082/index.md",
  "summary": "In this paper, we use micro panel data to examine the effects of oil price changes on employment and real wages, at the aggregate and industry levels. We also measure differences in the employment and wage responses for workers differentiated on the basis of skill level.",
  "sections": [
    {
      "heading": "Summary of core findings",
      "content": "- Oil price increases result in a substantial decline in real wages for all workers.\n- Oil price increases raise the relative wage of skilled workers.\n- Panel data econometric techniques that control for unobserved heterogeneity are essential to uncover these results; the relative-wage effect for skilled workers is completely hidden in OLS estimates.\n- Changes in oil prices induce changes in employment shares and relative wages across industries.\n- There is little evidence that oil price changes cause labor to consistently flow into those sectors with relative wage increases."
    },
    {
      "heading": "Methodology and data",
      "content": "- The analysis uses micro panel data to examine effects on employment and real wages at the aggregate and industry levels.\n- Worker responses are measured separately by skill level to capture differential employment and wage effects."
    },
    {
      "heading": "Industry- and skill-specific results",
      "content": "- Employment shares and relative wages across industries change in response to oil price movements.\n- Despite industry-level relative-wage increases in some sectors, labor does not consistently reallocate into those sectors following oil price changes.\n- Skilled workers experience a relative wage gain even as real wages decline in absolute terms for all workers following oil price increases."
    },
    {
      "heading": "Subject classification and keywords",
      "content": "- Subjects: Commodities, Employment, Inflation, Labor, Oil, Oil prices, Prices, Wages\n- Keywords: DOIL terms, Employment, experience interaction term, experience terms, Inflation, interaction term, long-lived wage decline, Oil, oil coefficient, oil price, oil price variable, Oil prices, wage cut, wage decline, wage effect, wage equation, wage measure, wage rate, Wages, WP\n\nSource: \"The Employment and Wage Effects of Oil Price Changes: A Sectoral Analysis\", IMF Working Papers 1995, 037 (1995).\n\n---\n\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082/bundle-manifest.json)",
    "Authors: Michael P. Keane, Eswar S Prasad",
    "Published: April 1, 1995",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451845518.001",
    "Oil price increases result in a substantial decline in real wages for all workers.",
    "Oil price increases raise the relative wage of skilled workers.",
    "Panel data econometric techniques that control for unobserved heterogeneity are essential to uncover these results; the relative-wage effect for skilled workers is completely hidden in OLS estimates.",
    "Changes in oil prices induce changes in employment shares and relative wages across industries.",
    "There is little evidence that oil price changes cause labor to consistently flow into those sectors with relative wage increases.",
    "The analysis uses micro panel data to examine effects on employment and real wages at the aggregate and industry levels.",
    "Worker responses are measured separately by skill level to capture differential employment and wage effects.",
    "Employment shares and relative wages across industries change in response to oil price movements.",
    "Despite industry-level relative-wage increases in some sectors, labor does not consistently reallocate into those sectors following oil price changes.",
    "Skilled workers experience a relative wage gain even as real wages decline in absolute terms for all workers following oil price increases.",
    "Subjects: Commodities, Employment, Inflation, Labor, Oil, Oil prices, Prices, Wages",
    "Keywords: DOIL terms, Employment, experience interaction term, experience terms, Inflation, interaction term, long-lived wage decline, Oil, oil coefficient, oil price, oil price variable, Oil prices, wage cut, wage decline, wage effect, wage equation, wage measure, wage rate, Wages, WP"
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082/index.md",
    "json": "/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082/index.json",
    "bundleManifest": "/en/publications/wp/issues/2016/12/30/the-employment-and-wage-effects-of-oil-price-changes-a-sectoral-analysis-1082/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-17T07:45:05.220Z"
}