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The shale revolution and entrepreneurship: an assessment of the relationship between energy sector expansion and small business entrepreneurship in US counties

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  • Tsvetkova, Alexandra
  • Partridge, Mark

Abstract

economic growth and overall regional socioeconomic wellbeing. Entrepreneurship is particularly important for economic health of rural and remote areas. The recent shale boom brought growth to many communities creating new jobs; however, it is unclear how these effects are distributed across self-employed and wage and salary segments of local economies. The resource curse literature suggests that a booming energy sector may crowd out entrepreneurship. Given the self-reinforcing nature of local self-employment and entrepreneurship in general, such a negative impact of expanding energy sector, if present, is likely to suppress future growth prospects in regions that experience the shale revolution. Using SUR and IV approaches and a differencing strategy, this paper estimates the effects of the growth in oil and gas extraction industry on self-employment growth in metropolitan and rural US counties during the 2001-2013 period. The results suggest that after three years, oil and gas sector expansion tends to crowd out self-employment. In contrast, energy sector expansion promotes wage and salary employment growth in nonmetro counties but has crowding out effects in metro counties. Overall, we find that the expanding energy sector suppresses self-employment, especially in rural communities, in line with one mechanism of the resource curse.

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  • Tsvetkova, Alexandra & Partridge, Mark, 2017. "The shale revolution and entrepreneurship: an assessment of the relationship between energy sector expansion and small business entrepreneurship in US counties," MPRA Paper 77058, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:77058
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    1. repec:eee:energy:v:170:y:2019:i:c:p:411-422 is not listed on IDEAS
    2. Partridge, Mark & Tsvetkova, Alexandra & Betz, Michael, 2019. "Are the Most Productive Regions Necessarily the Most Successful? Local Effects of Productivity Growth on Employment and Earnings," MPRA Paper 91797, University Library of Munich, Germany.
    3. Alexandra Tsvetkova & Mark Partridge & Michael Betz, 2019. "Self-employment effects on regional growth: a bigger bang for a buck?," Small Business Economics, Springer, vol. 52(1), pages 27-45, January.

    More about this item

    Keywords

    Entrepreneurship; Oil and Gas Extraction; economic development; regional economics;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P25 - Economic Systems - - Socialist Systems and Transition Economies - - - Urban, Rural, and Regional Economics

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