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Abstract

Innovations in hydraulic fracturing have led to oil and gas booms in various shale plays across the U.S. The economic impact of shale development has been estimated previously with varying results. The results are often used to justify supporting the industry. Thus, a precise estimate of the economic impact to communities is important. A county level analysis of the lower 48 states from 2001-2011 provides an estimate of the local economic impact as well as the labor market restructuring occurring due to the recent shale boom and can provide insight into the mechanisms behind the “natural resource curse.” Results suggest that the im-pact of shale development on employment is modest, with the impact on earnings growth ap-proximately double that of the impact on employment, though the growth effects seem to wane over time. The employment multiplier from oil and gas development is estimated to be approximately 1.3.

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