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The distributional impacts of an energy boom in Western Canada

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  • Joseph Marchand

Abstract

In the energy‐rich provinces of Western Canada, inequality rose over the past two decades while poverty declined, raising the question of whether the recent energy boom was a contributing factor. This study uses local labour market variation in energy extraction intensity to identify these distributional impacts. The growth in local outcomes attributable to the boom is found to be U‐shaped and significant across all distributional segments, leading to somewhat increased local inequality aggregates and reduced local poverty. This pattern is preserved but varies across sectors, driving a large local inequality increase in energy extraction, with smaller rises and reductions in other industries. Les effets de répartition d'un boom énergétique dans l'Ouest canadien. Dans les provinces riches en énergie de l'Ouest canadien, les inégalités se sont accrues au cours des deux dernières décennies pendant que la pauvreté déclinait, sans qu'on puisse toujours dire si le boom énergétique était un facteur explicatif important. Cette étude utilise un marché local du travail, soumis à des variations dans l'intensité de l'extraction de l'énergie, pour identifier les effets de répartition. On découvre que la croissance des effets locaux attribuables au boom suit un pattern en U, et est significatif à travers tous les segments de répartition. Voilà qui a mené à une inégalité quelque peu accrue dans les agrégats locaux mais à une pauvreté locale diminuée. Le pattern se répète dans tous les secteurs, mais varie selon les secteurs, ce qui enclenche un grand accroissement dans l'inégalité locale dans l'extraction de l'énergie, et des croissances et déclins plus faibles dans les autres industries.

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  • Joseph Marchand, 2015. "The distributional impacts of an energy boom in Western Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(2), pages 714-735, May.
  • Handle: RePEc:wly:canjec:v:48:y:2015:i:2:p:714-735
    DOI: 10.1111/caje.12141
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    2. Sebastian Fossati & Joseph Marchand, 2024. "First to $15: Alberta’s Minimum Wage Policy on Employment by Wages, Ages, and Places," ILR Review, Cornell University, ILR School, vol. 77(1), pages 119-142, January.
    3. David A. Green & René Morissette & Ben M. Sand & Iain Snoddy, 2019. "Economy-Wide Spillovers from Booms: Long-Distance Commuting and the Spread of Wage Effects," Journal of Labor Economics, University of Chicago Press, vol. 37(S2), pages 643-687.
    4. Fossati, Sebastian & Marchand, Joseph, 2020. "First to $15: Alberta's Minimum Wage Policy on Employment by Wages, Ages, and Places," Working Papers 2020-15, University of Alberta, Department of Economics, revised 27 Jul 2023.
    5. Peter Burton & Shelley Phipps, 2017. "Economic Well-Being of Canadian Children," Canadian Public Policy, University of Toronto Press, vol. 43(4), pages 299-330, December.
    6. Nicole M. Fortin & Thomas Lemieux, 2015. "Changes in wage inequality in Canada: An interprovincial perspective," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(2), pages 682-713, May.
    7. Joseph Marchand & Jeremy Weber, 2018. "Local Labor Markets And Natural Resources: A Synthesis Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 469-490, April.
    8. Joseph Marchand, 2017. "Thinking about Minimum Wage Increases in Alberta: Theoretically, Empirically, and Regionally," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 491, pages 1-20, September.
    9. Marchand, Joseph, 2020. "Routine Tasks were Demanded from Workers during an Energy Boom," Working Papers 2020-8, University of Alberta, Department of Economics.
    10. Chan, Jeff & Karim, Ridwan, 2023. "Oil royalties and the provision of public education in Brazil," Economics of Education Review, Elsevier, vol. 92(C).
    11. Benoit Dostie, 2018. "Polarisation du marché du travail, structure industrielle et croissance économique," CIRANO Project Reports 2018rp-02, CIRANO.
    12. Christopher Hartwell & Roman Horvath & Eva Horvathova & Olga Popova, 2022. "Natural resources and income inequality in developed countries: synthetic control method evidence," Empirical Economics, Springer, vol. 62(2), pages 297-338, February.
    13. Álvarez, Roberto & García-Marín, Álvaro & Ilabaca, Sebastián, 2021. "Commodity price shocks and poverty reduction in Chile," Resources Policy, Elsevier, vol. 70(C).
    14. Miles Corak, 2016. "`Inequality is the root of social evil,' or Maybe Not? Two Stories about Inequality and Public Policy," Canadian Public Policy, University of Toronto Press, vol. 42(4), pages 367-414, December.
    15. W. Craig Riddell, 2018. "The labor market in Canada, 2000–2016," IZA World of Labor, Institute of Labor Economics (IZA), pages 432-432, April.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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