NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Hunt Allcott, Daniel Keniston

NBER Working Paper No. 20508
Issued in September 2014
NBER Program(s):   DAE   EEE   IO   LS   PR

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.

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This paper was revised on June 28, 2017

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Document Object Identifier (DOI): 10.3386/w20508

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