The shale revolution and entrepreneurship: An assessment of the relationship between energy sector expansion and small business entrepreneurship in US counties

The shale revolution led to a sharp increase in the US oil and gas production. Although the long-term consequences of this process are yet to be assessed, existing evidence points to both positive and negative effects. The shale revolution has increased employment and income in resource-rich communities, but also contributed to pollution, higher crime rates and lower educational attainment. The job-creating effects, however, may conceal differing impacts on paid employment and self-employment, where crowding out the latter is in line with one mechanism of the resource curse hypotheses. In this paper, we examine the previously undocumented impact of energy sector expansion on small business entrepreneurship. Using SUR and IV approaches and a differencing strategy, we estimate the effects of growth in oil and gas extraction industry on self-employment growth in metropolitan and rural US counties during the 2001-2013 period. The results suggest that after three years, oil and gas sector expansion appears to crowd out self-employment elsewhere in the economy, or, at the very least, has few net positive self-employment spillovers. This pattern may lead to a resource curse.