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

76 Pages Posted: 22 Sep 2014 Last revised: 29 Sep 2014

See all articles by Hunt Allcott

Hunt Allcott

New York University (NYU)

Daniel Keniston

Yale University; Yale University - Cowles Foundation; National Bureau of Economic Research (NBER); The International Growth Centre; Abdul Latif Jameel Poverty Action Lab (J-PAL)

Date Written: September 2014

Abstract

Do natural resources benefit producer economies, or is there a “Natural Resource Curse,”0 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 United States. 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 one percent higher real wages. Overall, the results provide evidence against a Natural Resource Curse within the United States.

Suggested Citation

Allcott, Hunt and Keniston, Daniel, Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America (September 2014). NBER Working Paper No. w20508, Available at SSRN: https://ssrn.com/abstract=2499370

Hunt Allcott (Contact Author)

New York University (NYU) ( email )

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Daniel Keniston

Yale University ( email )

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Abdul Latif Jameel Poverty Action Lab (J-PAL) ( email )

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