Do Oil Booms have Persistent Local Impacts? Historical Evidence
Does history matter for urbanization? This paper examines whether short-run shocks to urban population arising from idiosyncratic productivity shocks can have a persistent impact on long-run urban growth. The analysis addresses a fundamental question of urban economics: whether agglomeration economies (and thus growth) derive from an independent role for city size (and diversity) as well as specialization (Strange 2004) The study takes advantage of the history of urbanization in the U.S. American state of Oklahoma during the period 1907 to 2010. A series of highly localized, short-term exogenous positive shocks to urban populations resulted from oil discoveries that created boomtowns almost overnight during the “Black Gold” oil boom of 1900 through 1927. A severe episode of land erosion (known as the “Dust Bowl”) during the early 1930s resulted in depopulation and out-migration. These episodes provide clean natural experiments to identify plausible causal impacts. Our study of urban growth over the period 1940 through 2010 finds that positive shocks to urban population induced by the oil boom had a persistent impact on urban growth up to 60 to 70 years after they occurred. Negative shocks from the erosion crisis persisted for about thirty years. These results suggest that historical shocks can drive path-dependent urban growth. We also investigate the mechanisms through which these oil shocks generated such persistence.
David Cuberes is Professor of Economics at Maynooth University. His research fields are urban economics, economic history and economic growth.
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