Horizontal drilling innovations revolutionized the U.S. oil and gas industry and facilitated a boom in production in the mid‐2000s in regions with shale and tight‐sands reservoirs. This paper examines the effects of the boom on individual employment and earnings within boom states. We account for endogenous migration decisions by using a novel instrument for oil and gas production in workers' state of residence. We find statistically significant and economically meaningful positive effects of the oil and gas boom for long‐term resident workers, those who were born in and reside in their home state.
Recent studies have found evidence of a local employment multiplier’s effect. For the most part, these studies provide an average estimate for all labor markets. In this paper, we examine how the average local employment multiplier, the effect of an exogenous increase in employment in the tradable sector on total employment, depends on the characteristics of the local labor market. Specifically, we estimate the average multipliers for coastal, noncoastal, large, and small metropolitan statistical areas (MSAs) across different time periods using the data of 333 US MSAs. Overall, we find a reduced form of local employment multiplier ranging from 1.38 to 2.24, which is within the range of typically estimated local employment multipliers. In addition, the characteristics of the local labor market matter. The local multipliers appear larger in noncoastal and large MSAs. For small and coastal metros, the multiplier is closer to 1.5 than to 2.0 while in the case of large and noncoastal metros, it is closer to 2.0 than to 1.5. The local multipliers are also sensitive to the time period considered.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.