Dutch disease or agglomeration? The local economic effects of natural resource booms in modern America

Hunt Allcott, Daniel Keniston

    Research output: Contribution to journalArticle

    Abstract

    Do natural resources benefit producer economies, or is there a "Natural Resource Curse", 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 U.S. 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 1% higher real wages. Overall, the results provide evidence against a Natural Resource Curse within the U.S.

    Original languageEnglish (US)
    Pages (from-to)695-731
    Number of pages37
    JournalReview of Economic Studies
    Volume85
    Issue number2
    DOIs
    StatePublished - Apr 1 2018

    Fingerprint

    Natural resources
    Dutch disease
    Oil
    Gas
    Agglomeration
    Economic effect
    Manufacturing
    Natural resource curse
    Endowments
    Resources
    Census
    Micro data
    Learning-by-doing
    Standard deviation
    Productivity spillovers
    Productivity
    Wages
    Local economy
    Long-term growth
    Real wages

    Keywords

    • Agglomeration
    • Dutch Disease
    • Local economic shocks
    • Natural resource booms

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Dutch disease or agglomeration? The local economic effects of natural resource booms in modern America. / Allcott, Hunt; Keniston, Daniel.

    In: Review of Economic Studies, Vol. 85, No. 2, 01.04.2018, p. 695-731.

    Research output: Contribution to journalArticle

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