Who Really Benefits from a Resource Boom? Evidence from the Marcellus and Utica Shale Plays

Abstract

We analyze the impact of the recent energy boom in the Marcellus and Utica shale formations on local labor markets in Ohio, Pennsylvania and West Virginia. Unique to our analysis is the use of origin-destination files (LODES) from the U.S. Census Bureau which provide employment statistics at the census block level based on where jobs are located and where workers live who hold those jobs. The richness of this data enables us to identify cross border mobility of workers as labor demand increases due to greater resource extraction. We find that increases in the value of new oil and gas production significantly increases local workplace employment and average earnings in the county, but that job gains go mostly to workers who reside outside of the county. Specifi cally, a one standard deviation increase in the value of new oil and gas production per capita in a county-year increases workplace employment by 283 jobs, decreases the fraction of jobs held locally, and increases the flow of workers from counties 25-200 miles away. Furthermore, we find some positive employment spillovers across industries but these new jobs appear to go to non-local residents as well. We do find evidence that the earnings distribution shifts to the right for both local residents and workers who reside outside the county.