Modeling Economic Transformation During Energy Transition
In a groundbreaking project titled "Maximizing the Gains of Old and New Energy Development for America's Rural Communities," a team of researchers has shed light on the economic effects of energy sector expansion in non-metropolitan and metropolitan counties across the United States.
The research, which employs a comprehensive economic impact analysis model, delves into the employment landscape, focusing on sectors such as construction, transportation and warehousing, wholesale trade, accommodation and food, real estate, and the real estate sector. Interestingly, these sectors have seen a significant increase in new employment opportunities in non-metro counties, contrasting the decline in manufacturing and agriculture jobs.
In metropolitan counties, the effects of energy sector expansion on employment are less pronounced. After one year, estimates show a crowding out of jobs in other sectors of the economy as the energy sector expands, with the transportation and warehousing sectors being an exception. After six years, the positive effects of energy sector growth in non-metro counties peak and begin to decline thereafter.
The model, which uses Economic Modeling Services, Inc. (EMSI) as its primary data source for county-level employment and earnings data disaggregated at the four-digit industry level, also takes into account a variety of variables. These include community size, time frame, energy resource potential, economic sector, geography, historical intensity of energy infrastructure, and demographic and educational attainment variables.
The research aims to summarize the economic impacts related to energy development in six chronological fact sheets. It also emphasizes the importance of a comprehensive approach to economic development, cautioning against an overreliance on the energy sector as an answer to viable economic growth.
The team developed the model using an instrumental variable (IV) approach to consider the energy resource potential of a geographical area while accounting for the endogeneity bias. They also incorporated a variable to measure the change in other industry sectors to determine the influence of new energy development, known as the industry mix variable.
Comparing the job creation effects of energy shocks to equal-sized shocks in the rest of the economy, growth elsewhere in the economy generally had larger net positive spillovers. This suggests that a diversified local economy has a greater growth potential compared to an economy relying on jobs from an energy boom.
The research findings underscore the importance of considering the complex interplay of economic, demographic, and fiscal variables in understanding the local impacts of energy development. While the specific variables used in the economic impact analysis model for this project are not directly detailed in the available search results, they are likely to include local employment figures, income changes, business activity levels, population changes or migration patterns, tax revenues and public service costs, energy production metrics, investment amounts, environmental and land use factors, and supply chain effects.
For precise variable specification, access to the original model documentation or project's detailed report would be necessary. If you require assistance in locating these resources, I would be happy to help.
In conclusion, the research project "Maximizing the Gains of Old and New Energy Development for America's Rural Communities" provides valuable insights into the economic impacts of energy development in rural America. It underscores the importance of a diversified local economy and a comprehensive approach to economic development for sustainable growth.
- The research findings suggest that a diversified local economy has a greater growth potential compared to an economy relying on jobs from an energy boom, as demonstrated by comparing the job creation effects of energy shocks to equal-sized shocks in the rest of the economy.
- In non-metro counties, the employment landscape has seen a significant increase in new opportunities in sectors such as real estate, construction, transportation and warehousing, wholesale trade, accommodation and food, and the real estate sector, due to energy sector expansion.
- In metropolitan counties, the effects of energy sector expansion on employment are less pronounced, and there's a crowding out of jobs in other sectors of the economy as the energy sector expands, except for the transportation and warehousing sectors.
- The economic impact analysis model used in the research project, "Maximizing the Gains of Old and New Energy Development for America's Rural Communities," takes into account a variety of variables such as community size, energy resource potential, economic sector, geography, historical intensity of energy infrastructure, and demographic and educational attainment variables, among others.
