Firm formation and survival in the shale boom
- PDF / 598,743 Bytes
- 22 Pages / 547.087 x 737.008 pts Page_size
- 49 Downloads / 168 Views
Firm formation and survival in the shale boom Mark Partridge & Shawn M. Rohlin Amanda L. Weinstein
&
Accepted: 11 March 2019 # Springer Science+Business Media, LLC, part of Springer Nature 2019
Abstract We examine the geographical and temporal effects of the technological changes that led to the U.S. shale oil and gas boom. We assess changes in U.S. county rates of entrepreneurship and survival rates of existing businesses across different industries in response to the innovations that led to energy development in counties with shale resources. We employ a panel difference-in-differences approach and rely on the geological determination of the location of shale resources and the unexpected innovation in shale extraction as our source of exogeneity. We find that temporal impacts obscure effects that would look small if we only examined average effects. Namely, new firm formation and sales initially decrease in boom regions, followed by a positive trend after the initial disruption. While new firm formation eventually recovers after many years, the overall impact on business dynamism
M. Partridge Department of Agriculture, Environmental, and Development Economics, Ohio State University, 336 Agricultural Administration Building, 2120 Fyffe Road, Columbus, OH 43210, USA e-mail: [email protected] S. M. Rohlin (*) Department of Economics, Kent State University, Kent, OH 44242, USA e-mail: [email protected] A. L. Weinstein University of Akron, 259 S. Broadway St., Akron, OH 44325, USA e-mail: [email protected]
is negative, suggesting that the areas most affected by this technological change may not benefit. Keywords Shale boom . Entrepreneurship . Firm survival JEL classification Q4 . I2 . O1 . L26
1 Introduction Innovation and entrepreneurship are often heralded as engines of growth. For this reason, the literature has focused on the importance of innovation and entrepreneurship for economic growth (Romer 1986; Lucas 1988; Nadiri 1993; Wong et al. 2005; Goetz et al. 2011; Stephens et al. 2013). Research has also focused on how innovation spreads and how communities are able to assimilate innovation and transform it into growth, to support and further spur innovation, creating a virtuous cycle (Rodriguez-Pose and Crescenzi 2008; Jaffe 1986; Jaffe et al. 1993; Feldman and Audretsch 1999; Audretsch and Feldman 1996). However, few studies have examined the potential negative consequences of innovation on local areas. In the last decade, innovations in oil and gas extraction, namely hydraulic fracturing and horizontal drilling, have dramatically changed world energy markets (Weinstein and Partridge 2015). These innovations, which first tapped into oil and gas reserves long trapped in shale plays in Texas, have spread to other states and countries around the world. In the USA, shale
M. Partridge et al.
production of oil and gas has reduced oil imports by 31 percent and natural gas imports by 37 percent since 2005 (U.S. EIA). This unexpected boom in U.S. oil and gas production led to increases in oil and gas empl
Data Loading...
