Oil & Gas Induced Economic Fluctuations and Self-Employment

We investigate effects of plausibly exogenous variation in the value of oil and natural gas production in local economies on self-employment in the United States. We find that self-employment is procyclical, i.e. self-employment increases during a business cycle expansion and is reduced during a contraction. This effect comes entirely from unincorporated self-employed workers (in lieu of incorporated self-employment). We also find that self-employment explains an economically meaningful share of the employment adjustment; point estimates suggest that approximately 8 to 9 percent of the employment adjustment comes from unincorporated self-employed individuals - a group that makes up about 6 percent of total employment.