Resident vs. Nonresident Employment Associated with Marcellus Shale Development

Author:

Wrenn Douglas H.,Kelsey Timothy W.,Jaenicke Edward C.

Abstract

There is much debate about the employment effect of shale gas development, especially as it relates to extraction counties. Anecdotal evidence suggests that many of the jobs created are filled by nonresidents. We examine the impact shale gas development has on local employment in Pennsylvania using a data set that links workers to their personal residences. We find that activity in the Marcellus shale has had a modest positive impact on job growth. The impact is cut in half, however, when we use data for county residents only. Thus, traditional employment data may overestimate employment impacts from shale development.

Publisher

Cambridge University Press (CUP)

Subject

Economics and Econometrics,Agronomy and Crop Science

Reference38 articles.

1. Most empirical models that employ a treatment-effect strategy to test the impact of particular policies are based on policy environments in which there has been a clear binary change in a policy that has affected a well-defined, exogenously determined subset of the population and thus a clearly distinguishable before and after.

2. The rate of U.S. natural gas production from shale has risen rapidly over the last decade, growing from 4.1 percent of total U.S. production in 2005 to 23.1 percent in 2010 (Wang and Krupnick 2013).

3. For example, in 2013 in the midst of a (failed) re-election campaign, Governor Tom Corbett claimed that 200,000 Pennsylvanians had jobs or were made more prosperous because of the industry (T. Puko, Pittsburgh Tribune Review, November 14, 2013).

4. We thank an anonymous reviewer for pointing out that our DDD terminology is the same as saying that we are estimating a difference-in-differences model in growth rates instead of levels. Given the close empirical connection between our models and those of Banzhaf and Lavery (2010), we continue to use DDD terminology but this key distinction should be kept in mind.

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