Good Red Dog: The Long Term Economic Impact of Mining Activity in Rural Alaska

Abstract

While resource booms in rural areas have the potential to transform communities, they also raise questions about the distribution and sustainability of the benefits/costs in both the short and long run. We estimate the long term effects of the Red Dog mine, an Alaska mine in the Northwest Arctic borough, on a variety of economic outcomes. We find suggestive evidence of immediate and long lasting effects of the mine on wages as well as evidence of increases in employment and reductions in government dependence. These findings suggest that even in the absence of pre-conditions to maximize the multiplier effects, the borough’s attempts to internalize the wealth generated by the mine have been successful because of agreements that prioritized local employment and revenues. This model could be potentially be implemented by other rural communities with newfound resource riches.