Are Resource Booms a Blessing or a Curse?

ABSTRACT

We provide the first estimates of the long-run effects of temporary resource booms on the income of people, rather than places, focusing on the U.S. oil boom and bust of the 1980s. Using annual household-level longitudinal data spanning 1969–2012, we find positive effects during the boom period and negative effects during the bust period. The cumulative net effect of the boom–bust on lifetime earnings was arguably negative when restricting the sample to prime working years (younger than 55) and positive otherwise only because the boom delayed retirement. The evidence suggests the boom was ultimately a curse for the average household. It failed to generate net income gains during prime age, and its volatility caused costly income smoothing later in life.