The shale boom (mining of shale oil and gas) has contributed to an increase of crime rates in US states where 50-60% of the population lives in rural areas. That is West Virginia, North Dakota, and Arkansas. Especially the number of violent crimes has increased. This is the conclusion reached by economists from Ural Federal University (UrFU, Russia) and Shippensburg University of Pennsylvania (USA). The research results are published in The Extractive Industries and Society.
The researchers studied utilizes panel data from various sources and comprised all US states from 1999 to 2015. They compared the performance before and after 2007, when the shale boom occurred. Researchers made the dependent variable retrieved from the data of the Federal Bureau of Investigation's website, from the University of Kentucky Center for Poverty Research data, Annual State-Level Measures of Human Capital Attainment database, Measures of Income Inequality database, State-level employment database.
"The analysis showed that the fracking boom states have lower unemployment rates on average," says Kazi Sohag, research co-author, assistant professor at UrFU. "We suggest the consequence of this was a decrease in the number of crimes against families and children, as well as a decrease in the number of vagrants. However, these states are poorer, with fewer educated people, a smaller share of the private sector, and a high public sector share. Over the years of the shale boom, burglaries have increased there, and the rate of violent crime has increased by about 36%. Because of this, each state had to spend $ 15.67 million additional victimization cost per year."
The rate of violent crime could have risen for several reasons, the researchers presume. First, fracking involves the creation of low-skilled temporary jobs. Basically, such work involves men who come to earn money for some time. Inequality in the number of men and women can, on the one hand, provoke certain types of crimes against women, and on the other hand, it encourages the development of a business associated with bars, prostitution, and drugs, the authors of the article note.
"The shale boom is also associated with increased income inequality: local royalty income is concentrated among a small segment of the local population," said Kazi Sohag. "Other residents do not benefit or are economically worse off. Inequality provides a rational incentive to commit a crime."
Third, residents in fracking states are disproportionately affected by disamenities like pollution, noise, water quality, and heavy traffic. This leads to tensions between local residents and temporary workers and, as a result, causes an increase in violent crime. All this is an additional burden on local authorities and law enforcement agencies.
To solve the problem, researchers advise several tools: to make the shale industry more technological and reduce human capital in it, to strengthen the work of law enforcement officials.
"Since local royalty income is concentrated among a small segment, the distribution of income and wealth should be improved. It will help improve the well-being of residents through optimal tax policies," said Kazi Sohag. "In addition, the damage that shale mining does to the environment should be reduced. This will reduce the number of negative factors affecting the lives of state residents."
The authors caution that it is premature to generalize the results of the study to other countries. Consideration should be given to the political, cultural, and other characteristics of each country.
"Our future studies can focus on more countries like Saudi Arabia, Russia, and Norway. It will help to generalize the findings considering the spillover or spatial dependency of crimes," said Kazi Sohag.
The Extractive Industries and Society