Mueller et al.: Market Concentration and Natural Resource Development
In Market Concentration and Natural Resource Development in Rural America, J. Tom Mueller (Geography and Environmental Sustainability, University of Oklahoma), Jesse E. Shircliff (Sociology and Anthropology, Utah State), and Marshall Steinbaum (Economics, University of Utah) evaluate the role of labor market concentration in moderating the impact of extractive and non-extractive (tourism or recreation) natural resource development on per capita income and poverty in rural America.
Market Concentration acknowledges rural labor markets are frequently dominated by a single large employer or have a limited number of firms. In general, labor market concentration is associated with a negative impact on economic propserity because workers are more vulnerable (with reduced bargaining power) and likely to suffer surpressed wages. Nonetheless, the authors assert that despite its prevalance in rural places, labor market concentration has received little direct attention from scholars engaged specifically on issues of rural economic prosperity. Market Concentration and Natural Resource Development in Rural America, published in Rural Sociology, seeks to remedy this.
The authors focus on two forms of natural resource development: extractive (oil, gas, timber) and non-extractive (tourism, outdoor recreation). Prior work has shown that high levels of extractive natural resource development are associated with economic hardship in rural areas, and although the evidence is less clear for non-extractive developments, the authors assert these non-extractive developments have also been associated with negative effects, including “negative returns to income, elevated poverty, unaffordable housing, and social conflict.”
In this work, the authors focus specifically on how—or if—rural labor market concentration uniquely exaccerbates these negative economic effects in the specific context rural resource development and, particularly, natural resource dependence. To test these effects, the authors collated data from six different sources including demographic data from the 2010 Census, the Bureau of Economic Analysis Local Area Personal Income and Employment, and an online job posting database to create a county-level dataset for the United States from 2010 to 2016. They evaluated labor market concentration in determining the economic effects of various forms of rural resource development and also evaluated effects across the rural manufactoring sector for comparision.
The results are nuanced and worth a full read, but generally, the authors found labor market concentration had a particularly big effect on economic outcomes in rural counties dependent on extractive natural resource development. The case was less clear for non-extractive development, and the authors generally found no significant relationship between manufacturing specialization and economic prosperity nor any moderating effect of labor market concentration in that sector.
Ultimately, this analysis illustrates that, while both extractive and non-extractive rural natural resource development may be inherently exploitative of rural labor markets, their specialization curves should not be expected to be identical. The authors also conclude that market concentration plays a unique role in the relationship between natural resources and economic prosperity that is not seen in manufacturing. Overall, market concentration emerges from the piece as an under-explored issue across all research, but particularly neglected among rural scholars, where it may be particularly important.
