Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution

48 Pages Posted: 12 Oct 2015 Last revised: 1 Feb 2023

See all articles by James Feyrer

James Feyrer

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Erin T. Mansur

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Bruce Sacerdote

Dartmouth College - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 2015

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.

Suggested Citation

Feyrer, James and Mansur, Erin T. and Sacerdote, Bruce, Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution (October 2015). NBER Working Paper No. w21624, Available at SSRN: https://ssrn.com/abstract=2672738

James Feyrer (Contact Author)

Dartmouth College - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Erin T. Mansur

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States
603 646 2398 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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Bruce Sacerdote

Dartmouth College - Department of Economics ( email )

6106 Rockefeller Hall
Hanover, NH 03755
United States
603-646-2121 (Phone)
603-646-2122 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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