When Opportunity Moves to You: Oil Discoveries and Intergenerational Mobility

Speaker: Stephan Maurer, Co-Authors: Diego Battiston, Andrei Potlogea, José V. Rodriguez Mora Abstract: What are the main drivers of the substantial heterogeneity in socioeconomic mobility across space? To shed light on this question, we study large local economic shocks brought about by the discovery of large oilfields in the US South during the first half of the 20th century. Drawing on recently available interlinked census data, we exploit the timing and location of large mineral discoveries to compare the evolution of socieconomic mobility for individuals residing in counties that discover oil against that of those residing in counties that do not. We find that oil wealth increases intergenerational earnings mobility but decreases intergenerational educational mobility. We provide evidence that these effects are driven by changes in local economic structure in the aftermath of oilfield discoveries: Oil wealth is associated with the increased availability of relatively high-paying jobs with low educational requirements. Finally, we show that the effects of these shocks are persistent: 70 years after these oil discoveries, oil counties were still richer, less unequal and had higher intergenerational earning mobility than non-oil counties. We conclude that differences in economic structure are likely an important driver of differences in intergenerational mobility across geography and time.