Coal mining, economic development, and the natural resources curse

- The economic landscape for coal mining has changed dramatically in the past two decades.
- We use exogenous instruments for coal mining to control for unobserved endogeneity.
- We investigate coal mining's impact on a wide range of local economic indicators.
- The effects of coal mining on local communities are complex and nuanced.
- The Appalachian region experiences different effects from coal mining than the rest of the U.S.
- Coal mining's effect on local communities differ between boom and bust periods and over the long run.

Coal mining has a long legacy of providing needed jobs in isolated communities but it is also associated with places that suffer from high poverty and weaker long-term economic growth. Yet, the industry has greatly changed in recent decades. Regulations, first on air quality, have altered the geography of coal mining, pushing it west from Appalachia. Likewise, technological change has reduced labor demand and has led to relatively new mining practices, such as invasive mountain-top approaches. Thus, the economic footprint of coal mining has greatly changed in an era when the industry appears to be on the decline. This study investigates whether these changes along with coal's “boom/bust” cycles have affected economic prosperity in coal country. We separately examine the Appalachian region from the rest of the U.S. due to Appalachia's unique history and different mining practices. Our study takes a new look at the industry by assessing the winners and losers of coal development around a range of economic indicators and addressing whether the natural resources curse applies to contemporary American coal communities. The results suggest that modern coal mining has rather nuanced effects that differ between Appalachia and the rest of the U.S. We do not find strong evidence of a resources curse, except that coal mining has a consistent inverse association with measures linked to population growth and entrepreneurship, and thereby future economic growth.