Thursday, October 07, 2021

Living near oil booms is correlated with lower lifetime earnings and later retirement, USDA research finds

People who live near booming oil-production areas may earn less over their lifetimes and retire later than others their age, says new research by the Agriculture Department's Economic Research Service, the University of Oregon, and the University of Wisconsin-Madison. The research aimed to assess the long-term affects of boom-and-bust cycles on households in top oil-boom areas in 1980. From the report:

"Although incomes rose for both boom and non-boom households during the oil boom, they increased by an average of about $5,000 more annually for boom households during the early boom (1975–79) and $6,900 more each year during the late boom (1980–84) compared with similar households in counties that were not producing oil. The subsequent bust, however, saw incomes rise by an average of $8,000 less annually from 1985 to 1992 for households in boom counties compared with households in non-boom counties. The lower average household gains were driven in part by increased unemployment and the dissipation of relative wage gains during the boom. The oil boom and bust appeared to have no effect on relative changes in household income after 1993. Aggregating across all years, cumulative income for the average household in a boom county was $7,600 lower than for an average household in an otherwise similar non-boom county between 1975, the beginning of the boom, and 2012, the final year of the study."

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