Saturday, August 31, 2013

Is Texas' economic growth due to economic policies or increased oil production?

One of the books available for 2306 argues that Texas' economic policies have created recent boom in jobs, and that other states should emulate them. But here's an observation that that states that have grown the most in recent years have oil based economies.

That's tough to replicate.

Is it possible that the Great Plains simply have better zoning laws, better governors, better entrepreneurial incentives, better schools, and better [other things that you typically associate with growth]? Yes, it is possible that the entire central time zone is magically gifted at matching people and jobs. It's also really, really unlikely. More likely is that the Great Plains have some of the positive aforementioned qualities -- Houston's zoning policies are exemplary, e.g. -- but most importantly, they did well because many of them shared something in common at the trans-state level: bountiful energy resources under their feet. 

Take the five or so states with fastest-growing oil production -- ND, TX, OK, CO, NM -- and draw their post-crash job performance against the rest of the country. This is the picture you get. Except for New Mexico, the four top oil-growth states fell lower and have climbed higher than the rest of the country.