The response of state employment to oil price volatility

Unobserved component models are estimated on monthly data over the period 1983 to 2010 to explain the response of U.S. state employment to oil price volatility. Univariate models are estimated for each state, multivariate models for several groups of states. For most states, oil price volatility has a statistically significant and negative impact on employment after about a quarter of a year. The impact is more pronounced for states with large GDP shares in construction, auto production, retail, and the hospitality industry. States with emphasis on knowledge intensive industries and reliance on nuclear power are much less affected. © 2013, Springer Science+Business Media New York.