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Firm formation and survival in the shale boom

Mark Partridge, Shawn M. Rohlin () and Amanda Weinstein
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Shawn M. Rohlin: Kent State University

Small Business Economics, 2020, vol. 55, issue 4, No 7, 975-996

Abstract: Abstract We examine the geographical and temporal effects of the technological changes that led to the U.S. shale oil and gas boom. We assess changes in U.S. county rates of entrepreneurship and survival rates of existing businesses across different industries in response to the innovations that led to energy development in counties with shale resources. We employ a panel difference-in-differences approach and rely on the geological determination of the location of shale resources and the unexpected innovation in shale extraction as our source of exogeneity. We find that temporal impacts obscure effects that would look small if we only examined average effects. Namely, new firm formation and sales initially decrease in boom regions, followed by a positive trend after the initial disruption. While new firm formation eventually recovers after many years, the overall impact on business dynamism is negative, suggesting that the areas most affected by this technological change may not benefit.

Keywords: Shale boom; Entrepreneurship; Firm survival (search for similar items in EconPapers)
JEL-codes: I2 L26 O1 Q4 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s11187-019-00162-9

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