IMF Working Papers

This paper examines how oil shocks shape labor market outcomes across 89 countries from 1975 to 2022. Leveraging a high-frequency oil supply shock series and a rich panel of quarterly labor market data, we find that shocks raising oil prices trigger sharp and persistent employment losses, particularly in oil-importing countries, oil-intensive sectors, and among male workers. Delayed but enduring employment declines also emerge in oil-moderate sectors and among female workers, revealing broader labor market implications. In contrast, employment gains in oil-exporting countries, and following expansionary supply shocks, are comparatively modest. Labor force participation responds less consistently, with patterns displaying higher variability. These findings highlight how oil shocks transmit unevenly through labor markets, with lasting impacts across countries, sectors, and demographic groups, extending well beyond short-term macroeconomic fluctuations.