Who Benefits from an Oil Boom? Mostly non-residents

UAA Professors Mouhcine Guettabi and Alex James have just published a paper in the journal Resource and Energy Economics entitled “Who benefits from an Oil Boom?  Evidence from a Unique Alaska Data Set.”  The paper applies a statistical approach called the “Synthetic Control Method” to examine the impact of the oil boom that began in 2006 on employment and income for residents and non-residents of the North Slope Borough.  The study uses data from 2000 to 2016.  They find four interesting results:

1. Employment on the North Slope increased due to the oil boom, but this was entirely due to increases in non-resident employment.
2. There were negligible effects on employment of residents, and this effect was the same for men and women.
3. The composition of residential employment shifted from the public sector to the private sector.
4. There is some weak evidence of a modest increase in residential wages in response to the oil boom.

This research by Professors Guettabi and James takes advantage of both the unique geographic situation of North Slope oil production and also unique Alaska data derived from Permanent Fund Dividend administration.  The North Slope Borough and the oil production on the North Slope are remote and isolated, so the impacts of oil development are clearer and less likely to be confounded by other factors.  And for most economic data sets, it is a challenge to clearly separate residents from non-residents.  Alaska’s Permanent Fund Dividend program creates a unique way to distinguish residents from non-residents.  The Alaska Department of Labor and Workforce Development has created a data set, called the Alaska Local and Regional Information (ALARI), that combines PFD data and wage and income data that can be analyzed to separate the impacts of economic changes on residents and non-residents.  This research obviously addresses important questions for Alaska.  But the research has much broader significance because it shows that other sources of economic data, such as the employment and wage data from the US Bureau of Economic Analysis, are probably inadequate for addressing the question of relative impacts on residents and non-residents.