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Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America

Hunt Allcott and Daniel Keniston

Review of Economic Studies, 2018, vol. 85, issue 2, 695-731

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.

Keywords: Dutch Disease; Agglomeration; Natural resource booms; Local economic shocks (search for similar items in EconPapers)
JEL-codes: J21 L60 L71 O13 Q33 R11 (search for similar items in EconPapers)
Date: 2018
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