The Fed – Boom Town Business Dynamics

September 2020

Boom Town Business Dynamics

Ryan A. Decker, Meagan McCollum, & Gregory B. Upton Jr.

Abstract:

The shale oil & gas boom in the U.S. provides a unique opportunity to study economic growth in a “boom town” environment, to derive insights about economic expansions more generally, & to obtain clean identification of the causal effects of economic growth on specific margins of business adjustment. The creation of new business establishments–separate from the expansion of existing establishments–accounts for a disproportionate share of the multi-industry employment growth sparked by the shale boom, an intuitive but not inevitable empirical result that is broadly consistent with canonical models of firm dynamics. New firms, in particular, contribute nearly half of the cumulative economic growth resulting from the shale boom.

DOI: https://doi.org/10.17016/FEDS.2020.081

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