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

Hunt Allcott and Daniel Keniston

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: Do natural resources benefit producer economies, or is there a "Natural Resource Curse," perhaps as Dutch Disease crowds out manufacturing? We combine new data on oil and gas abundance with Census of Manufactures microdata to estimate how oil and gas booms have affected local economies in the United States. Migration does not fully offset labor demand growth, so local wages rise. Notwithstanding, manufacturing is actually pro-cyclical with resource booms, driven by growth in upstream and locally traded sectors. The results highlight the importance of highly local demand for many manufacturers and underscore how natural resource linkages can drive manufacturing growth.

JEL-codes: J2 L6 O4 Q43 R1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-geo, nep-lma and nep-ure
Date: 2015-11
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