Association for Public Policy Analysis & Management

The natural resource boom can affect schools and students through labor market restructuring and government revenue windfalls. In the Marcellus region, technological advances in horizontal drilling and high-volume hydraulic fracturing resulted in rapid growth of natural gas production since the late 2000s. This study investigates how income and employment across sectors changed in the Marcellus shale boom and their subsequent impact on student outcomes, using variations in drilling intensity and state policy. We analyze county-level panel data to identify the effects of the shale boom within Pennsylvania and use a border discontinuity design to estimate the spillover effects for residents of New York, where hydraulic fracturing for oil and gas extraction is banned. We find that boom counties experienced higher growth of per capita income and overall employment, while growth in the mining sector has crowded out employment in manufacturing. Despite the generally accepted belief that the resource boom primarily generates opportunities for the lowest-skilled workers, our estimates suggest that the effect of this particular labor demand shock on school dropouts is positive but close to zero. Contrary to prior studies at the national level, we find the share of population with high school diploma or some college experience has grown faster in the boom counties, which implies regional heterogeneity of labor market and allocation of school resources can be significant.