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The Impacts of Lower Natural Gas Prices on Jobs in the U.S. Manufacturing Sector

Author

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  • Wayne Gray
  • Joshua Linn
  • Richard Morgenstern

Abstract

The recovery of the U.S. manufacturing sector following the 2008-2009 economic recession coincided with a sharp drop in natural gas prices. To determine whether a causal connection in fact exists, we use confidential plant-level data for 1972-2012 to estimate the employment effects of changes in natural gas and other energy prices. Previous analyses have used aggregated data and failed to control for multiple drivers of employment dynamics, such as other input costs. We show that controlling for these factors substantially diminishes the effects of natural gas and electricity prices on manufacturing employment. Accounting for the direct effects of natural gas prices as well as the indirect effects via electricity prices, we estimate that the decline in natural gas prices between 2007 and 2012 raised overall manufacturing employment by 0.6 percent, and for gas-intensive industries, by 1.8 percent.

Suggested Citation

  • Wayne Gray & Joshua Linn & Richard Morgenstern, 2019. "The Impacts of Lower Natural Gas Prices on Jobs in the U.S. Manufacturing Sector," The Energy Journal, , vol. 40(5), pages 169-193, September.
    • Handle: RePEc:sae:enejou:v:40:y:2019:i:5:p:169-193
    DOI: 10.5547/01956574.40.5.wgra
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    References listed on IDEAS

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    1. Weber, Jeremy G., 2014. "A decade of natural gas development: The makings of a resource curse?," Resource and Energy Economics, Elsevier, vol. 37(C), pages 168-183.
    2. Kahn, Matthew E. & Mansur, Erin T., 2013. "Do local energy prices and regulation affect the geographic concentration of employment?," Journal of Public Economics, Elsevier, vol. 101(C), pages 105-114.
    3. Edward L. Glaeser & Glenn Ellison, 1999. "The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration?," American Economic Review, American Economic Association, vol. 89(2), pages 311-316, May.
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    Cited by:

    1. Goicoechea, Ana & Lang, Megan Elizabeth, 2023. "Firms and Climate Change in Low- and Middle-Income Countries," Policy Research Working Paper Series 10644, The World Bank.

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