The long term consequences of resource-based specialisation

Using geological variation in oil abundance in the Southern US, I examine the long term effects of resource-based specialisation through economic channels. In 1890 oil abundant counties were similar to other nearby counties but after oil was discovered they began to specialise in its production. From 1940-90 oil abundance increased local employment per square kilometre especially in mining but also in manufacturing. Oil abundant counties had higher population growth, higher per capita income and better infrastructure. © 2010 The Author(s). The Economic Journal © 2010 Royal Economic Society.