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The shale revolution and entrepreneurship: an assessment of the relationship between energy sector expansion and small business entrepreneurship in US counties

Alexandra Tsvetkova and Mark Partridge

MPRA Paper from University Library of Munich, Germany

Abstract: economic growth and overall regional socioeconomic wellbeing. Entrepreneurship is particularly important for economic health of rural and remote areas. The recent shale boom brought growth to many communities creating new jobs; however, it is unclear how these effects are distributed across self-employed and wage and salary segments of local economies. The resource curse literature suggests that a booming energy sector may crowd out entrepreneurship. Given the self-reinforcing nature of local self-employment and entrepreneurship in general, such a negative impact of expanding energy sector, if present, is likely to suppress future growth prospects in regions that experience the shale revolution. Using SUR and IV approaches and a differencing strategy, this paper estimates the effects of the growth in oil and gas extraction industry on self-employment growth in metropolitan and rural US counties during the 2001-2013 period. The results suggest that after three years, oil and gas sector expansion tends to crowd out self-employment. In contrast, energy sector expansion promotes wage and salary employment growth in nonmetro counties but has crowding out effects in metro counties. Overall, we find that the expanding energy sector suppresses self-employment, especially in rural communities, in line with one mechanism of the resource curse.

Keywords: Entrepreneurship; Oil and Gas Extraction; economic development; regional economics (search for similar items in EconPapers)
JEL-codes: L26 O1 O13 P25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-ent, nep-lma, nep-sbm and nep-ure
Date: 2017-02-23
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