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Firm formation and survival in the shale boom

Author

Listed:
  • Mark Partridge

    (Ohio State University)

  • Shawn M. Rohlin

    (Kent State University)

  • Amanda L. Weinstein

    (University of Akron)

Abstract

We examine the geographical and temporal effects of the technological changes that led to the U.S. shale oil and gas boom. We assess changes in U.S. county rates of entrepreneurship and survival rates of existing businesses across different industries in response to the innovations that led to energy development in counties with shale resources. We employ a panel difference-in-differences approach and rely on the geological determination of the location of shale resources and the unexpected innovation in shale extraction as our source of exogeneity. We find that temporal impacts obscure effects that would look small if we only examined average effects. Namely, new firm formation and sales initially decrease in boom regions, followed by a positive trend after the initial disruption. While new firm formation eventually recovers after many years, the overall impact on business dynamism is negative, suggesting that the areas most affected by this technological change may not benefit.

Suggested Citation

  • Mark Partridge & Shawn M. Rohlin & Amanda L. Weinstein, 2020. "Firm formation and survival in the shale boom," Small Business Economics, Springer, vol. 55(4), pages 975-996, December.
    • Handle: RePEc:kap:sbusec:v:55:y:2020:i:4:d:10.1007_s11187-019-00162-9
    DOI: 10.1007/s11187-019-00162-9
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    More about this item

    Keywords

    Shale boom; Entrepreneurship; Firm survival;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • I2 - Health, Education, and Welfare - - Education
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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