Cornell University

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AEP Seminar: Asset Ownership, Windfalls, and Income: Evidence from Oil and Gas Royalties - Jeremy G. Weber, Associate Professor, University of Pittsburgh

Monday, November 13, 2017 at 10:30am to 12:00pm

Warren Hall 151

The recent U.S. shale boom generated billions in royalty income for owners of oil and gas rights, which we use to study the local multiplier effect of shocks to private income. Each unanticipated royalty dollar received by county residents created an additional $0.48 in local income, mostly reflecting greater wage income. The full effect of royalties shifted local income distributions upward, decreasing low-income tax returns and increasing high-income returns. In aggregate, the total income effect was $66 billion in 2014, or 0.5 percent of U.S. personal income. Over the 2000 to 2014 period, royalties accounted for 70 percent of the local income effect of oil and gas development.