Are Resource Booms a Blessing or a Curse? Evidence from People (not Places)

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 to 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 life-time earnings was arguably negative when restricting the sample to prime working years (<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.