The Short-Run and Long-Run Effects of Resources on Economic Outcomes: Evidence From the United States 1936-2015

Abstract

This paper draws on a new state-level panel dataset and a model of domestic Dutch disease to examine the short-run and long-run effects of oil & natural gas, coal, and agricultural land endowments on state economies during 1936-2015.Using a flexible shift-share estimation approach, where the shift is national resource employment and the share is state resource endowment, we find that different resources had different short-run effects in different time periods, across increases and decreases in resource employment, and across different outcomes.Using long differences, we find that long-run population growth was an important margin of adjustment over 1936-2015.States with larger coal and agricultural endowments per square mile experienced significantly slower population growth than states with smaller endowments per square mile.Resource endowments had no effect on long-run growth in per capita income.

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