Qing Nie

The purpose of this paper is to study the response of aggregate and sectoral employment in the United States to shocks and uncertainties in the oil and macro markets. Based on a New Keynesian model with a first-order perturbation on occasionally binding constraints and uncertainty shock introduction, we get a primary theoretical support on the impacts of monetary policy regimes and uncertainty shocks. To explore the interactions of uncertainties in oil and aggregate markets in the presence and absence of the zero lower bound (ZLB), we estimate a VAR model with 12 variables using U.S. data for the period 1986Q1-2021Q4. With alternative oil and macroeconomic uncertainties and different monetary authorities, employment is significantly negatively affected by uncertainties when ZLB binds and fluctuating in the absence of ZLB. Finally, we obtain the responses of sectoral employments to different types of uncertainties under different monetary regimes and find that employments of sectors related to oil industry in production and finance fall significantly to an increase in uncertainty under the ZLB. These findings highlight the empirical relevance of oil prices and macroeconomic uncertainty on U.S. labor market dynamics.