The Texas Drilling Boom and Local Human Capital Investment

Abstract

Researchers and citizens alike question the long-term impacts of the shale oil boom on local communities. Studies have considered the boom's effects on employment, income, mobility, and human capital acquisition. This research specifically builds on research considering shale effects on secondary schooling. Using county-level data from Texas, we investigate two questions: (1) Has the latest oil boom led to a reduction in local high school graduation? (2) Is this effect different for immigrants, a group potentially vulnerable to local wage effects? Findings indicate insignificant overall effects; however, local oil drilling increases immigrant high school dropout rates.

The effects of natural resources on human capital accumulation: A literature survey

“…Percent of adults who have completed secondary school Manning (2004) Percent of the population with bachelor's degree or higher Adult population by education level Weber (2014) Adult literacy rate Davis (1995); Manning (2004); Philippot (2010); Stijns (2006) Youth and adult illiteracy rates Stijns (2009) Percentage of the total or youth population with no formal schooling Edwards (2016) On-the-job training Javadi et al (2017) Dropout rates Carpenter et al (2019) Percent of population without a high school degree Douglas and Walker (2017) The participation rate of the exposed municipal population Alvarez and Vergara (2016) hand, Baudino (2016) advocates using average years of schooling to lessen the problem of reverse causality from human capital to resource use in regression analysis.…”

“…dev. Inflation Tax revenues as percentage of total revenues (Araji & Mohtadi, 2018) Local returns from tertiary education, measured as log of average wage of local labor force with tertiary education (Alvarez & Vergara, 2016) Youth unemployment rate Shares of total income in the agricultural, construction, manufacturing, and retail industries (Carpenter et al, 2019)…”

“…Population (Carpenter et al, 2019;Erdoğan et al, 2020;Mousavi, 2019;Zhan et al, 2015; Population aged more than 65 (Cockx & Francken, 2014Zhan et al, 2015) Population aged less than 15 (Zhan et al, 2015) Population with access to safe water/sanitation (Davis, 1995) Population density (Mousavi, 2019;Zhan et al, 2015;) Population growth Share of population Black/Asian/Hispanic/foreign-born/has a bachelor's degree (Carpenter et al, 2019) Urbanization rate (Philippot, 2010;Sun et al, 2018) Ethno-linguistic fractionalization Share of ethnic minorities in total population (Zhan et al, 2015) Average demographic characteristics (age, gender, household size) (Alvarez & Vergara, 2016) Number of violent crimes per person (Continues)…”

“…Other output measures include earnings rate of return (Kim and Lin, 2017), increase in cognitive skills or educational system performance (Farzanegan & Thum, 2017), quality of higher education (Javadi et al., 2017), average test scores in mathematics or reading (Agüero et al., 2017), and youth or adult illiteracy rates (Davis, 1995; Manning, 2004; Philippot, 2010; Stijns, 2006, 2009). The most common participation measure is school enrolment rate, while others include the dropout rate (Carpenter et al., 2019), number of enrolled students (Agüero et al., 2017), the number of college students divided by the total population (Sun et al., 2018), on‐the‐job training rates (Javadi et al., 2017), or the number of adults by education level (Weber, 2014).…”

“…Carpenter et al (2019), for example, follow a panel of Texas counties from 2010 to 2014 to test whether the number of newly completed oil wells raises high school dropout rates. They control for local economic conditions, population density, and urban/rural adjacency, and instrument for the local wage rate using the interaction between energy prices and shale depth.…”