IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/21624.html
   My bibliography  Save this paper

Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution

Author

Listed:
  • James Feyrer
  • Erin T. Mansur
  • Bruce Sacerdote

Abstract

The combining of horizontal drilling and hydrofracturing unleashed a boom in oil and natural gas production in the US. This technological shift interacts with local geology to create an exogenous shock to county income and employment. We measure the effects of these shocks within the county where production occurs and track their geographic propagation. Every million dollars of oil and gas extracted produces $66,000 in wage income, $61,000 in royalty payments, and 0.78 jobs within the county. Outside the immediate county but within the region, the economic impacts are over three times larger. Within 100 miles of the new production, one million dollars generates $243,000 in wages, $117,000 in royalties, and 2.49 jobs. Thus, over a third of the fracking revenue stays within the regional economy. Our results suggest new oil and gas extraction led to an increase in aggregate US employment of 725,000 and a 0.5 percent decrease in the unemployment rate during the Great Recession.

Suggested Citation

  • James Feyrer & Erin T. Mansur & Bruce Sacerdote, 2015. "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution," NBER Working Papers 21624, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21624
    Note: EEE EFG LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w21624.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    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. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    3. Guy Michaels, 2011. "The Long Term Consequences of Resource‐Based Specialisation," Economic Journal, Royal Economic Society, vol. 121(551), pages 31-57, March.
    4. Fitzgerald, Timothy, 2014. "Importance of Mineral Rights and Royalty Interests for Rural Residents and Landowners," Choices, Agricultural and Applied Economics Association, vol. 29(4).
    5. Marchand, Joseph, 2012. "Local labor market impacts of energy boom-bust-boom in Western Canada," Journal of Urban Economics, Elsevier, vol. 71(1), pages 165-174.
    6. Grant D. Jacobsen & Dominic P. Parker, 2016. "The Economic Aftermath of Resource Booms: Evidence from Boomtowns in the American West," Economic Journal, Royal Economic Society, vol. 126(593), pages 1092-1128, June.
    7. Thiemo Fetzer, 2014. "Fracking Growth," CEP Discussion Papers dp1278, Centre for Economic Performance, LSE.
    8. Weber, Jeremy G., 2012. "The effects of a natural gas boom on employment and income in Colorado, Texas, and Wyoming," Energy Economics, Elsevier, vol. 34(5), pages 1580-1588.
    9. Hunt Allcott & Daniel Keniston, 2014. "Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America," NBER Working Papers 20508, National Bureau of Economic Research, Inc.
    10. Paul L. Joskow, 2013. "Natural Gas: From Shortages to Abundance in the United States," American Economic Review, American Economic Association, vol. 103(3), pages 338-343, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hilde C. Bjørnland & Leif Anders Thorsrud & Ragnar Torvik, 2018. "Dutch disease dynamics reconsidered," Working Paper 2018/1, Norges Bank.
    2. Gabriel E. Lade & Ivan Rudik, 2017. "Costs of Inefficient Regulation: Evidence from the Bakken," NBER Working Papers 24139, National Bureau of Economic Research, Inc.
    3. Steve Gibbons & Stephan Heblich & Esther Lho & Christopher Timmins, 2016. "Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain," SERC Discussion Papers 0207, Spatial Economics Research Centre, LSE.
    4. Richard Jaimes & Reyer Gerlagh, 2017. "Resource-Richness and Economic Growth in Contemporary U.S," CESifo Working Paper Series 6778, CESifo Group Munich.
    5. repec:eee:inecon:v:107:y:2017:i:c:p:34-59 is not listed on IDEAS
    6. Sascha Becker & Stephan Heblich & Daniel Sturm, 2013. "The Impact of Public Employment: Evidence from Bonn," ERSA conference papers ersa13p731, European Regional Science Association.
    7. repec:eee:enepol:v:117:y:2018:i:c:p:14-24 is not listed on IDEAS
    8. Monte, Ferdinando & Redding, Stephen J. & Rossi-Hansberg, Esteban, 2015. "Commuting, Migration and Local Employment Elasticities," CEPR Discussion Papers 10933, C.E.P.R. Discussion Papers.
    9. repec:ucp:jaerec:doi:10.1086/694034 is not listed on IDEAS
    10. Green, David & Morissette, Rene & Sand, Benjamin M., 2017. "Economy Wide Spillovers From Booms: Long Distance Commuting and the Spread of Wage Effects," Microeconomics.ca working papers -2017-7, Vancouver School of Economics, revised 21 Jun 2017.
    11. Brown, Jason, 2017. "Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts," Research Working Paper RWP 17-5, Federal Reserve Bank of Kansas City.
    12. Arezki, Rabah & Fetzer, Thiemo & Pisch, Frank, 2017. "On the comparative advantage of U.S. manufacturing: Evidence from the shale gas revolution," Journal of International Economics, Elsevier, vol. 107(C), pages 34-59.
    13. Brown, Jason & Fitzgerald, Timothy & Weber, Jeremy G., 2016. "Asset Ownership, Windfalls, and Income: Evidence from Oil and Gas Royalties," Research Working Paper RWP 16-12, Federal Reserve Bank of Kansas City.
    14. repec:eee:enepol:v:106:y:2017:i:c:p:345-355 is not listed on IDEAS
    15. repec:bin:bpeajo:v:47:y:2016:i:2016-02:p:287-357 is not listed on IDEAS
    16. Christiane Baumeister & Lutz Killian, 2016. "Lower Oil Prices and the U.S. Economy: Is This Time Different?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(2 (Fall)), pages 287-357.
    17. Arora, Vipin, 2017. "Shale and the US Economy: Three Counterfactuals," MPRA Paper 79672, University Library of Munich, Germany.
    18. 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.
    19. Lutz Kilian & Xiaoqing Zhou, 2018. "The Propagation of Regional Shocks in Housing Markets: Evidence from Oil Price Shocks in Canada," CESifo Working Paper Series 7005, CESifo Group Munich.
    20. Grant Jacobsen, 2016. "Who Wins in an Energy Boom? Evidence from Wage Rates and Housing," Upjohn Working Papers and Journal Articles 17-271, W.E. Upjohn Institute for Employment Research.
    21. repec:eee:eneeco:v:67:y:2017:i:c:p:533-544 is not listed on IDEAS

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:21624. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: () or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.