The Impact of the U.S. Shale Boom on Local Patenting

Abstract

This study examines the impacts of the U.S. shale boom on local patenting at a commuting zone level. I expect that the shale boom will negatively affect patents because shale development may crowd out labor and capital investments in other non-energy industries. My findings show that a one standard deviation increase in non-vertical drilling well density decreases patent intensity by 3.6% of the mean. Areas with higher drilling densities have lower levels of patented innovation compared to their counterfactuals. I also provide suggestive evidence on potential mechanisms. I find that the share of creative class workers decreases in high drilling density areas. This paper contributes to the existing literature related to the “natural resource curse.” I provide new evidence based on local patenting, which is an important indicator for regional innovation and long-term economic growth.