A recent publication by professors Christopher Jeffords, Alexi Thompson, and David Yerger explores the relationship between nonrenewable resource exraction and changes in industry-specific employment.
Professors Jeffords, Thompson, and Yerger embed a simple nonrenewable resource extraction model within a lake model of industry-specific employment, where flows to (from) employment from (to) unemployment depend on the attachment (separation) rate.
The attachment and separation rates vary with resource extraction, and the results, driven by the rate of extraction and the remaining resource stock, indicate that changes in the stationary employment level can be positive, negative, or zero.
There is a range where the separation rate is decreasing (increasing) and the attachment rate is increasing (decreasing), and the change in employment is determined by the combined effect of these changes.
Using data on coal production and employment in the U.S. as a guide, simple calculations provide a range of years beyond 2013 when it is expected that peak employment will be reached in the Marcellus Shale, and the results suggest that employment gains will likely continue for at least a decade.
The paper is available in the July 2015 issue of the International Journal of Energy Economics