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  5. Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution

  • James Feyrer
  • Erin T. Mansur
  • Bruce Sacerdote
American Economic Review
vol. 107, no. 4, April 2017
(pp. 1313–34)
See also: Comment by James and Smith (2020)
See also: Reply by Feyrer, Mansur, and Sacerdote (2020)

 

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Abstract

We track the geographic and temporal propagation of local economic shocks from new oil and gas production generated by hydrofracturing. Each million dollars of new production produces $80,000 in wage income and $132,000 in royalty and business income within a county. Within 100 miles, one million dollars of new production generates $257,000 in wages and $286,000 in royalty and business income. Roughly two-thirds of the wage income increase persists for two years. Assuming no general equilibrium effects, new extraction increased aggregate US employment by as many as 640,000, and decreased the unemployment rate by 0.43 during the Great Recession.

Citation

Feyrer, James, Erin T. Mansur, and Bruce Sacerdote. 2017. "Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution." American Economic Review, 107 (4): 1313–34. DOI: 10.1257/aer.20151326

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JEL Classification

  • D86 Economics of Contract: Theory
  • L14 Transactional Relationships; Contracts and Reputation; Networks
  • L81 Retail and Wholesale Trade; e-Commerce
  • L82 Entertainment; Media