Moving to Economic Opportunity: The Migration Response to the Fracking Boom
64 Pages Posted: 25 Jul 2016 Last revised: 5 Aug 2017
Date Written: July 25, 2016
Localized hydraulic fracturing (“fracking”) booms in the United States present a unique opportunity to explore migration responses to positive labor demand shocks in the current context of low geographic mobility. Using data from 1999 to 2013, I show that fracking led to large increases in potential earnings and employment as well as a sizable migration response in fracking counties. This average migration effect masks substantial underlying heterogeneity in migration behavior across both demographics and regions. Migrants to fracking areas were more likely to be male, unmarried, young, and less educated than movers more generally. Furthermore, both in- and out-migration rates increased with fracking and both flows were driven by the same demographic groups, suggesting fracking resulted in short-term migration and increased churn. An instrumental variables analysis using fracking conditions to instrument for earnings suggests that a ten percent increase in average earnings increased in-migration rates by 3.8 percent in North Dakota fracking counties, as compared to only 2.4 percent in the West, 1.6 percent in the South, and 0.5 percent in the Northeast. This difference across regions is statistically significant; robust to housing market controls, geographic spillovers, and other various specifications; and is only partially explained by differences in commuting behavior, initial population characteristics, or a non-linear relationship between earnings and migration. Data on news stories suggest that information might be playing a role. Under certain conditions, there is migration to large positive economic shocks, even among less educated populations, although the magnitude of this response might be dampened by non-market factors, such as the lack of information.
Keywords: internal migration, labor migration, mobility, North Dakota fracking, natural resource shock, local labor markets
JEL Classification: J61, Q33, Q35, R11, R23
Suggested Citation: Suggested Citation