Employment Impacts of Upstream Oil and Gas Investment in the United States
Table of Contents
Author(s)
Mark Agerton
Nonresident ScholarPeter R. Hartley
Baker Institute Rice Faculty Scholar | George A. Peterkin Professor of EconomicsKenneth B. Medlock III
James A. Baker, III, and Susan G. Baker Fellow in Energy and Resource Economics | Senior Director, Center for Energy StudiesTed Loch-Temzelides
Baker Institute Rice Faculty Scholar | George and Cynthia Mitchell Professor in Sustainable DevelopmentTo access the full paper, download the PDF on the left-hand sidebar.
Abstract
Technological progress in the exploration and production of oil and gas during the 2000s has led to a boom in upstream investment and has increased the domestic supply of fossil fuels. It is unknown, however, how many jobs this boom has created. We use time-series methods at the national level and dynamic panel methods at the state level to understand how the increase in exploration and production activity has impacted employment. We find robust statistical support for the hypothesis that changes in drilling for oil and gas as captured by rig counts do, in fact, have an economically meaningful and positive impact on employment. The strongest impact is contemporaneous, though months later in the year also experience statistically and economically meaningful growth. Once dynamic effects are accounted for, we estimate that an additional rig count results in the creation of 37 jobs immediately and 224 jobs in the long run, though our robustness checks suggest that these multipliers could be bigger.
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