Abstract

We study the labor market effects of the 1989 Exxon Valdez Oil Spill in Prince William Sound, Alaska, which was the largest U.S. oceanic oil spill prior to the 2010 Gulf Oil Spill. We find that employment and average earnings increased in 1989 when the cleanup effort was largest and there appears to have been little, if any, adverse effect on average labor market opportunities in later years. Increased wages elicited increased labor supply in the form of both in-migration of workers and increased weekly hours. While the labor market effects of the spill were largely beneficial, there is some evidence that the effects upon self-employed fishing boat owners in the region may have been more heterogeneous, with some owners signing lucrative cleanup contracts with Exxon and its agents while others did not. The existence of these positive labor effects does not address the significant environmental, psychological and social costs imposed on the region and on the communities whose livelihood and organization were affected by the spill.