Graduate Research and Discovery Symposium (GRADS)

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A large literature demonstrates that technological change, much of it complementary to skilled labor, has generated increases in the returns to skill that have been a key driver of growth in aggregate educational attainment in the United States. Do technological innovations that are complementary to unskilled labor correspondingly generate a decrease in the returns to skill, and hence a decrease in educational attainment? This paper examines the educational, earnings, and employment responses to local labor demand shocks brought about by recent technological innovations in horizontal drilling and hydrofracturing in the oil and natural gas industry. I find that increases in fracking production led to decreased college and high school enrollment and attainment, increased earnings, and increased employment for both men and women, though the effects are relatively larger for men. Non-college educated workers experienced relatively larger earnings and employment gains than college educated workers, accordant with fracking technology being unskill biased. These findings are consistent with my conceptual model, which predicts that both an increase in the implicit opportunity cost of attending college and a decrease in the relative returns to college are important mechanisms through which fracking decreased educational attainment.