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Follow the money: Aggregate, sectoral and spatial effects of an energy boom on local earnings

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  • Weinstein, Amanda L.
  • Partridge, Mark D.
  • Tsvetkova, Alexandra

Abstract

Many U.S. towns reportedly boomed after new technologies in oil and gas extraction led to rapid development of shale resources. Recent research on the expected economic impact mainly focused on the employment effects associated with new oil and gas jobs. Instead, our focus is on the impact of oil and gas industry growth on local earnings while paying attention to the spatial and sectoral effects and assessing whether an increase in earnings due to energy development seeps out due to the peculiarities of the industry. Our estimation results suggest that oil and gas earnings multipliers are modest and similar to oil and gas employment multipliers, with relatively large shares of the earnings leaving the county on average. Likewise, oil and gas multipliers tend to be smaller or comparable to the estimated multipliers for equal-sized shocks in the rest of the economy, suggesting that oil and gas is not a special industry case. Given the high wages in the sector (and potentially large royalty payments), these results may be surprising.

Suggested Citation

  • Weinstein, Amanda L. & Partridge, Mark D. & Tsvetkova, Alexandra, 2018. "Follow the money: Aggregate, sectoral and spatial effects of an energy boom on local earnings," Resources Policy, Elsevier, vol. 55(C), pages 196-209.
    • Handle: RePEc:eee:jrpoli:v:55:y:2018:i:c:p:196-209
    DOI: 10.1016/j.resourpol.2017.11.018
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    Cited by:

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    5. Marcos-Martinez, Raymundo & Measham, Thomas G. & Fleming-Muñoz, David A., 2019. "Economic impacts of early unconventional gas mining: Lessons from the coal seam gas industry in New South Wales, Australia," Energy Policy, Elsevier, vol. 125(C), pages 338-346.
    6. Carpenter, Craig Wesley & Anderson, David & Dudensing, Rebekka, 2019. "The Texas Drilling Boom and Local Human Capital Investment," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 51(2), pages 199-218, May.
    7. Mark Partridge & Alexandra Tsvetkova & Michael Betz, 2021. "Are the most productive regions necessarily the most successful? Local effects of productivity growth on employment and earnings," Journal of Regional Science, Wiley Blackwell, vol. 61(1), pages 30-61, January.
    8. Watson, Brett & Reimer, Matthew N. & Guettabi, Mouhcine & Haynie, Alan, 2021. "Commercial fisheries & local economies," Journal of Environmental Economics and Management, Elsevier, vol. 106(C).
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    10. Cai, Zhengyu & Maguire, Karen & Winters, John V., 2018. "Who Benefits from Local Oil and Gas Employment? Labor Market Composition in the Oil and Gas Industry in Texas," GLO Discussion Paper Series 246, Global Labor Organization (GLO).
    11. Mark Partridge & Shawn M. Rohlin & Amanda L. Weinstein, 0. "Firm formation and survival in the shale boom," Small Business Economics, Springer, vol. 0, pages 1-22.
    12. Yıldız, Taşkın Deniz, 2023. "How can shares be increased for indigenous peoples in state rights paid by mining companies? An education incentive through direct contribution to the people," Resources Policy, Elsevier, vol. 85(PA).
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    14. Evans, Neil & Jones, Calvin & Munday, Max & Song, Meng, 2019. "Economic effects in the UK periphery from unconventional gas development: Evidence from Wales," Energy, Elsevier, vol. 166(C), pages 1037-1046.
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    17. Mark Partridge & Shawn M. Rohlin & Amanda L. Weinstein, 2020. "Firm formation and survival in the shale boom," Small Business Economics, Springer, vol. 55(4), pages 975-996, December.
    18. Cai, Zhengyu & Maguire, Karen & Winters, John V., 2019. "Who benefits from local oil and gas employment? Labor market composition in the oil and gas industry in Texas and the rest of the United States," Energy Economics, Elsevier, vol. 84(C).
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