Oil price changes and wages: a nonlinear and asymmetric approach

We assess the relationship between oil prices and wages in 15 top oil producing counties in the USA using data between 2001 and 2018. The analysis is conducted at the sectoral level where wages in seven industries are assessed in both the long- and short-run using a panel ARDL model. Asymmetric county level analyses are also conducted using nonlinear ARDL (NARDL) models. Results from the panel indicate that in the long-run, a positive shock to oil prices granger causes wages to increase in all sectors, with the largest (smallest) increase in the manufacturing (service) sector. Short-run coefficients indicate that oil price shocks have the largest effect on resource sector wages. County level results from the NARDL models provide evidence that there is no consistent effect on wages following oil price shocks in the long- and short-run in the overall economy.