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Fossil fuels have shaped the European economy since the industrial revolution. In this paper, we analyse the effect of coal and oil on long-run economic growth, exploiting variation at the level of European NUTS-2 and NUTS-3 regions over the last century. We show that an “oil invasion” in the early 1960s turned regional coal abundance from a blessing into a curse, using new detailed data on carboniferous strata as an instrument. Moreover, we show that human capital accumulation was the key mechanism behind this reversal of fortune. Not only did former coal regions fail to accumulate sufficient levels of human capital, but pre-industrial human capital helped declining regions to reinvent themselves. Without sufficient human capital, fossil fuels did never generate sustainable growth.
Across industrialized countries, regional disparities in labor market outcomes and income have increased in recent decades. This paper investigates how one of the largest localized labor demand shocks tied to the beginning of de-industrialization- the decline of the mining industry between 1960 and 2010 - affects labor market outcomes in the long run. The analysis relies on a new panel data set based on digitized census records from Belgium, France, the UK, and Germany that allows to trace labor market adjustments over 60 years for the male and female working-age population separately. For the causal estimation, I use an IV-shift share approach that exploits exogenous variation in the shifts induced by increased seaborne trade of energy substitutes and the share given by geological rock strata to predict mining activity. The male population disproportionately suffered under this (early) de-industrialization shock and the subsequent job loss. For the male population, the employment-population ratio has not yet recovered resulting in persistent local joblessness. In contrast, the female working-age population experienced a strong catch-up in employment and participation. I find that at the aggregate level, a substantial, albeit time-lagged population response paired with a strong increase in female participation rates fully compensate for the loss of male jobs over the decades. As a consequence, the male-female employment gap shrinks over time.