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The Local Economic Impacts of Hydraulic Fracturing and Determinants of Dutch Disease

Author

Listed:
  • Peter Maniloff

    () (Division of Economics and Business, Colorado School of Mines)

  • Ralph Mastromonaco

    () (Department of Economics, University of Oregon)

Abstract

In this paper we quantify the local economic impacts of the development of unconventional shale oil and gas reserves through the controversial extraction procedure known as hydraulic fracturing or "fracking" and assess the possibility of the boom creating a "resource curse" for resource-rich counties. First, using government local economic data matched to highly detailed national oil and natural gas panel data, we estimate the effect that new "fracking" installations have on local job growth and average earnings, controlling for time-varying unobserved determinants of job growth, overall, by industry, and by region. We find that overall employment effects are substantial although smaller than some previous studies. Second, we show that shale development increases wages in manufacturing in counties with relatively tight labor markets and little prior oil and gas industry presence. Increased wages in the manufacturing sector suggests the possibility of a loss of competitiveness in some counties with shale oil and gas resources, raising the specter of a future resource curse.

Suggested Citation

  • Peter Maniloff & Ralph Mastromonaco, 2014. "The Local Economic Impacts of Hydraulic Fracturing and Determinants of Dutch Disease," Working Papers 2014-08, Colorado School of Mines, Division of Economics and Business.
  • Handle: RePEc:mns:wpaper:wp201408
    as

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    File URL: http://econbus-papers.mines.edu/working-papers/wp201408.pdf
    File Function: First version, 2014
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    References listed on IDEAS

    as
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    Cited by:

    1. Catherine Hausman & Ryan Kellogg, 2015. "Welfare and Distributional Implications of Shale Gas," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(1 (Spring), pages 71-139.
    2. Melissa S. Kearney & Riley Wilson, 2017. "Male Earnings, Marriageable Men, and Nonmarital Fertility: Evidence from the Fracking Boom," NBER Working Papers 23408, National Bureau of Economic Research, Inc.
    3. Elizabeth U. Cascio & Ayushi Narayan, 2015. "Who Needs a Fracking Education? The Educational Response to Low-Skill Biased Technological Change," NBER Working Papers 21359, National Bureau of Economic Research, Inc.
    4. Komarek, Timothy M., 2016. "Labor market dynamics and the unconventional natural gas boom: Evidence from the Marcellus region," Resource and Energy Economics, Elsevier, vol. 45(C), pages 1-17.
    5. Fleming, David & Komarek, Timothy & Partridge, Mark & Measham, Thomas, 2015. "The Booming Socioeconomic Impacts of Shale: A Review of Findings and Methods in the Empirical Literature," MPRA Paper 68487, University Library of Munich, Germany.

    More about this item

    Keywords

    local employment; job growth; dutch disease; resource curse; hydraulic fracturing; shale gas;

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