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The Impacts of Oil and Gas Developments on Local Economies in the United States

Rajbhandari, Isha
http://orcid.org/0000-0003-1400-9295
http://rave.ohiolink.edu/etdc/view?acc_num=osu1500413045323116

Abstract Details

2017, Doctor of Philosophy, Ohio State University, Agricultural, Environmental and Developmental Economics.
Recent innovations in hydraulic fracturing methods and micro-seismic technology along with rising oil and gas prices have led to oil and gas booms in various U.S. shale plays. While this appears to be a positive step forward, it is still unclear whether directly impacted local communities benefit from unconventional gas development. The three essays in this dissertation model and analyze the relatively unexplored short- and long-term externalities associated with energy-related economic booms on local labor market outcomes, human capital migration, and occupations, providing valuable insights on how local communities are impacted by oil and gas development. The first chapter analyzes the short- and long-run economic impacts of oil and gas boom on local labor market outcomes. I use a unique dataset with annual employment at 4-digit North American Industry Classification System codes to estimate the direct demand effects of shale gas development in the 2000s. For the long-run, I exploit the multiple booms and busts from the 1970s to 1990s to address the existence of resource curse in resource-intensive economies. Using a difference-in-difference methodology, this paper accounts for the heterogeneity in energy experience over time and across regions. It also explores whether pre-boom level of locally available human capital and history of energy extraction influence how a region responds to the energy boom. The results suggest that oil and gas developments have positive multiplier effects on the short- and long-run job and income growth. The modest positive multiplier effect in the long run implies that the benefits of oil and gas production might decline in the long run, suggesting that increased reliance on natural resources over time could make communities more vulnerable. The second chapter uses individual-level data from the American Community Survey to estimate the impact of shale booms on U.S. interregional migration, while considering both origin and destination characteristics, as well as, different temporal periods. The inflow of migrants is decomposed into four educational-attainment categories to highlight different responses depending on skill-type. This paper is the first to compare oil and gas shocks to similar-sized economic shocks to assess whether and how the impact of oil and gas booms on migration differ from equal-sized shocks elsewhere in the economy. We find a significant positive migration response associated with oil and gas booms by the third year of development, indicating a lagged migration response. The positive impact is largest on migrants with medium-high human capital, implying that oil and gas areas are mainly attractive to individuals with technical or occupational degrees, with much smaller responses for low- and high-educated workers. Yet, for comparison, migrants generally tend to be equally or more responsive to an equal-sized average shock in the rest of the economy, suggesting that energy booms have less of an impact on migration, especially for highly educated workers. The third chapter evaluates the impact of oil and gas development on the occupation-specific job growth in resource-intensive economies. I use a unique dataset with annual county employment at 2- and 5-digit 2010 Standard Occupation Classification (SOC) code to explore the `types’ of jobs created due to oil and gas boom. Using a first-difference methodology, this study empirically estimates the direct demand effects of oil and gas boom on occupation-specific job growth from 2005 to 2014. To avoid potential endogeneity, I employ the instrumental variable (IV) approach using a combination of instruments based on the geological measures of oil and gas resources and drilling intensity of oil and gas wells. The study finds that oil and gas development has a significant positive impact on job growth for most occupations. Some occupations that experience relatively large job growth include derrick, rotary drill, and service unit operators, supervisors of construction and extraction workers, truck drivers, chief executives, and secretaries. While there is significant variation in the types of occupations associated with oil and gas development, the results suggest that many of these occupations, on average, require workers to have vocational and technical trainings in addition to a high school diploma, thereby indicating an increase in demand for workers with intermediate skills.
Mark Partridge (Advisor)
Alessandra Faggian (Advisor)
Ani Katchova (Committee Member)
159 p.
Economics; Energy; Labor Economics; Regional Studies
unconventional gas development; energy; oil and gas development; regional economics; interregional migration; natural resource curse; regional development; human capital;

Recommended Citations

Citations

  • Rajbhandari, I. (2017). The Impacts of Oil and Gas Developments on Local Economies in the United States [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1500413045323116

    APA Style (7th edition)

  • Rajbhandari, Isha. The Impacts of Oil and Gas Developments on Local Economies in the United States. 2017. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1500413045323116.

    MLA Style (8th edition)

  • Rajbhandari, Isha. "The Impacts of Oil and Gas Developments on Local Economies in the United States." Doctoral dissertation, Ohio State University, 2017. http://rave.ohiolink.edu/etdc/view?acc_num=osu1500413045323116

    Chicago Manual of Style (17th edition)

osu1500413045323116
545
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This open access ETD is published by The Ohio State University and OhioLINK.