This project aims to understand the role of energy costs, and specifically oil prices, in skill-biased technological change. Since expenditures associated with commuting (e.g., gasoline) are more significant as a share of income for low-skill workers, fluctuations in oil prices have a larger impact on their labor supply, relative to high-skill workers. Do oil supply shocks have a persistent effect on employment and labor earnings, especially for low skill workers in low-density (e.g. rural) areas? Do different policies aimed at combating climate change by encouraging a shift away from fossil fuels (e.g. carbon taxes vs fuel efficiency standards), in particular in transportation, have a differential impact on low-income and high-income workers?
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