Shale production and income mobility

August 20, 2013

Nathan Randazzo explores the linkage between shale oil production and the very high rates of upper income mobility in the Dakotas.  The study by Raj Chetty, Emmanual Saez, Nathan Hendren and Patrick Kline at Harvard’s Equality of Opportunity Project received full coverage from the New York Times last month.    While both the original report and the Times write up took notice of the importance of geography, neither noted the likely influence of the fracking boom on high mobility rates in the Dakotas, and to a lesser degree across parts of Texas.   The conclusion is obvious – you can’t have aLand of Opportunity without opportunity.  Expanded oil and gas production lend that opportunity – not only at the drill sites, but at associated industries.  And, crucially, much of that opportunity is not dependent on the prior acquisition of expensive credentials.  This is only true in the new production areas – opportunity departs as the fields mature (see, for example, the low mobility rates across Alaska’s North Slope).




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