Working Paper: NBER ID: w20508
Authors: Hunt Allcott; Daniel Keniston
Abstract: Do natural resources benefit producer economies, or is there a “Natural Resource Curse,”0 perhaps as the crowd-out of manufacturing productivity spillovers reduces long-term growth? We combine new data on oil and gas endowments with Census of Manufactures microdata to estimate how oil and gas booms affect local economies in the United States. Local wages rise during oil and gas booms, but manufacturing is not crowded out—in fact, the sector grows overall, driven by upstream and locally-traded subsectors. Tradable manufacturing subsectors do contract during resource booms, but their productivity is unaffected, so there is no evidence of foregone local learning-by-doing effects. Over the full 1969-2014 sample, a county with one standard deviation additional oil and gas endowment averaged about one percent higher real wages. Overall, the results provide evidence against a Natural Resource Curse within the United States.
Keywords: Natural Resources; Economic Growth; Dutch Disease; Local Economies; Oil and Gas Booms
JEL Codes: J2; L6; O4; Q43; R1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Oil and gas booms (Q33) | Local wages (J31) |
| Oil and gas booms (Q33) | Local population (R23) |
| Oil and gas booms (Q33) | Local employment (J68) |
| Higher oil and gas endowment (Q35) | Higher local wages (J39) |
| Oil and gas booms (Q33) | Manufacturing growth in resource-abundant counties (O49) |
| Oil and gas booms (Q33) | Local welfare (I38) |