Tight Labor Markets and the Demand for Education: Evidence from the Coal Boom and Bust

Abstract

Human capital theory predicts that individuals acquire less schooling when the returns to schooling are small. To test this theory, the authors study the effect of the Appalachian coal boom on high school enrollments. During the 1970s, a boom in the coal industry increased the earnings of high school dropouts relative to those of graduates. During the 1980s, the boom subsided and the earnings of dropouts declined relative to those of graduates. The authors find that high school enrollment rates in Kentucky and Pennsylvania declined considerably in the 1970s and increased in the 1980s in coal-producing counties relative to counties without coal. The estimates indicate that a longterm 10% increase in the earnings of low-skilled workers could decrease high school enrollment rates by as much as 5-7%-a finding with implications for policies aimed at improving low-skilled workers' employment and earnings, such as wage subsidies and minimum wage increases.

Unconventional Gas and Oil Development in the United States: Economic Experience and Policy Issues

“…Similarly, Polèse (2009) and Polèse and Shearmur (2006) describe what they call the "intrusive rentier syndrome," in which rent extraction and crowding out in resource regions dominate new entrepreneurial activities. Another possible reason for a natural resource curse is that high wages in the resources sector for lessskilled workers reduces the incentives for further education and training (Black et al, 2005b;Freudenburg 1981Freudenburg , 1984, which puts those less-skilled workers (and the region as a whole) in a vulnerable position when the energy economy inevitably turns down. The employment which does occur in booms largely is in the extraction sectors, and in non-tradable sectors like construction, services, and the retail sector (Carrington, 1996;Black et al, 2005a;Marchand, 2012), which have little sustaining power once the boom ends.…”

Is shale development drilling holes in the human capital pipeline?

“…Despite concerns with the extraction of resources on U.S. educational attainment in the 'resource curse' literature (Black et al, 2005;Papyrakis and Gerlagh, 2007;Michaels, 2011;Walker, 2013;Haggerty et al, 2014;Morissette et al, 2015), little attention has been given to the effects of shale oil and gas development on educational attainment.…”

Community-Wide Job Loss and Teenage Fertility: Evidence From North Carolina

“…Within Becker's (Becker 1960;Becker and Tomes 1976) canonical framework on fertility, this difference means that although the income effects of downturns (that is, reduced economic support from family members for new mothers and their babies) may be similar between teens and adults (Caldwell and Antonucci 1997), substitution effects (moving toward childbearing when pushed by market forces away from paid employment) may be substantially weaker for teens. Indeed, research on teens' educational investments suggests that the high school dropout rate declines (Black et al 2005) and college attendance increases (Betts and McFarland 1995) in response to downturns. Moreover, because teens have longer time horizons for future childbearing, postponing fertility in response to income shocks may be less costly for teens than for adults.…”