Economists Shed Light on Impact of North Slope Oil Boom on Local Employment
Mouhcine Guettabi and Alex James, both professors in the College of Business and Public Policy’s Department of Economics, collaborated on “Who benefits from an Oil Boom? Evidence from a Unique Alaska Data Set,” which appears in the November issue of Resource and Energy Economics. The study focuses on the effects of the oil boom of the late 2000s in Alaska’s North Slope Borough. The data illustrated that most jobs created by the boom went to non-residents of the North Slope. Residential employment was unaffected.
Most studies of this kind rely on data tied to where people work, not where they live. For this study, Guettabi and James used Alaska’s Permanent Fund Dividend dataset to provide an analysis of labor market outcomes based on place of residence. They juxtaposed that analysis with a more conventional one that uses place-of-work data collected from the Bureau of Economic Analysis.
What Guettabi and James found could be very helpful to communities weighing the local costs of oil and gas projects against local benefits. They note that a variety of policies could be implemented to enhance residential gains, such as “local hire” laws and re-distributive tax policies, but their feasibility and effectiveness would require additional research.
“In resource-rich economies, skill comes in from out and money goes out from in,” noted James. “Because resource-rich states like Alaska and Wyoming don’t have an income tax, non-residential workers take more of their income home with them where it helps to pay for things like the University of California. Limiting this kind of leakage should be a key priority for policy makers in resource-rich states.”
About the authors
Mouhcine Guettabi is Associate Professor of Economics in the Department of Economics and with the Institute of Social and Economic Research. He publishes frequently on a wide variety of important issues in Alaska: health (including the economic impact of COVID-19), rural development, natural resources, fiscal policy/forecasting, and the Alaska Permanent Fund. He is frequently interviewed for news reports related to his research and presentations to business and community groups. Guettabi is a 2019 recipient of the UAA Chancellor’s Award for Community Engagement.
Alex James, UAA Associate Professor of Economics, is ranked among top 5% of all Economists worldwide based on research output over the past ten years. He joined the Department of Economics in 2014, where he conducts research and teaches introductory courses and natural-resource economics. He has published several articles on the economic effects of natural resource extraction. In 2019 he was named the recipient of the UAA Chancellor’s Award for Excellence in Research/Creative Activity for making outstanding and significant impacts to his field of study and to UAA through research, engagement or creative activities.