Do Oil Prices Influence Unemployment Rate in Texas?

17 Pages Posted: 9 Jan 2019

Date Written: March 27, 2017

Abstract

Recent recovery in the world oil prices and the positive performance of major oil company stocks has raised the prospects of major oil and natural gas producing states, such as Texas. High oil prices are interpreted as good news for Texas economy and the labor market. However, the impact of the oil market developments on the state’s employment level needs more scrutiny. Contradictory to theory and to several earlier empirical studies, we find that oil price swings have no effect on the unemployment rate in Texas. Even when structural breaks and time varying correlations are considered, neutrality of the state’s unemployment rate to oil market developments persists. DCCs imply that association between oil price/interest rate and unemployment rate did not change over time. Hence, higher (lower) oil prices may not lead to lower (higher) unemployment rate in Texas.

Keywords: Unemployment Rate, Oil Price, Texas

JEL Classification: C32, E24, Q43, R11

Suggested Citation

Soytas, Ugur, Do Oil Prices Influence Unemployment Rate in Texas? (March 27, 2017). Available at SSRN: https://ssrn.com/abstract=3306963 or http://dx.doi.org/10.2139/ssrn.3306963

Ugur Soytas (Contact Author)

DTU Management ( email )

Produktionstorvet 424
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Kgs. Lyngby, 2800
Denmark

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