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Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution

James Feyrer, Erin Mansur () and Bruce Sacerdote ()

No 21624, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The combining of horizontal drilling and hydrofracturing unleashed a boom in oil and natural gas production in the US. This technological shift interacts with local geology to create an exogenous shock to county income and employment. We measure the effects of these shocks within the county where production occurs and track their geographic propagation. Every million dollars of oil and gas extracted produces $66,000 in wage income, $61,000 in royalty payments, and 0.78 jobs within the county. Outside the immediate county but within the region, the economic impacts are over three times larger. Within 100 miles of the new production, one million dollars generates $243,000 in wages, $117,000 in royalties, and 2.49 jobs. Thus, over a third of the fracking revenue stays within the regional economy. Our results suggest new oil and gas extraction led to an increase in aggregate US employment of 725,000 and a 0.5 percent decrease in the unemployment rate during the Great Recession.

JEL-codes: E24 Q33 Q35 Q43 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-ene and nep-mac
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Published as James Feyrer & Erin T. Mansur & Bruce Sacerdote, 2017. "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution," American Economic Review, American Economic Association, vol. 107(4), pages 1313-1334, April.

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