The fracking boom may have driven an increase in high school dropouts (USO, OIL)
The fracking boom may be behind an increase in students dropping out of school.
According to a study by Elizabeth Cascio and Ayushi Narayan at Dartmouth, the high school graduation of males in states with significant fracking operations sharply since the beginning of the boom in 2006.
The study identified areas in states such as North Dakota, Texas, and Pennsylvania that had a significant increase in reserves of shale oil and gas from starting in 2006.
In these areas the dropout rate of high school males increased by more than 6% between 2006 and 2013, with the gap between female and male graduation rates rising by more than 11%. In addition, the boom has increased the incomes of male dropouts in comparison to female dropouts and males with a higher educational achievement.
"Fracking can make dropout more attractive through two channels: by increasing the opportunity cost of remaining enrolled in high school today (it may be possible to obtain a job in the oil fields right now), and by increasing expectations of a dropout's lifetime earnings," the authors wrote.
"If dropouts are impatient or present-biased, the job opportunities from fracking may seem even more enticing."
What's troubling, however, is that young people may not recognize that average lifetime earnings for high school dropouts are significantly less than those that graduate, or that the fracking boom is over.
"By the end of our sample period — when the price of oil remained (and hence labor demand should have remained) high — the labor demand shocks from fracking no longer appear to favor dropouts, pointing to the possibility that that fracking-induced relative wage boosts for dropouts were only temporary," said Cascio and Narayan.
Cascio and Narayan's data ended in 2013, meaning that the recent bust in oil prices, and layoffs of oil workers, are not represented in the researcher's outcomes.
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