Resource Curse in U.S. Coal Production
Date
2015
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Haverford College. Department of Economics
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Thesis
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eng
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Haverford users only
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Abstract
The Appalachia region of the United States contains abundant coal reserves as well as high levels of poverty. Appalachia accounts for nearly one-third of American coal production, yet the region remains deeply impoverished. This study looks at county-level data in a sample of 335 Appalachian counties from 1983-2013. Two hypotheses are tested, first whether a “Resource Curse” is occurring in Appalachia and second whether net migration is the main transmission channel through which the resource curse operates. This study estimates two equations, an empirical growth model and an equation describing net migration in terms of coal production, and then estimates these two equations simultaneously. The results indicate that a “Resource Curse” is present in Appalachia, reducing growth by 0.5 percentage points annually. Second, this study finds that coal production reduces net migration by 0.35 percentage points annually, indirectly contributing to lower growth of 0.13 percentage points per year. This study concludes that net migration accounts for roughly one quarter of the resource curse.