**STUDY TITLE**: OCS Development and Coastal Income Inequality: A
Comparative Analysis.

**REPORT TITLE**: OCS Development and Coastal Income Inequality: A
Comparative Analysis.

**CONTRACT NUMBER**: 14-35-0001-30470.

**SPONSORING OCS REGION**: Gulf of Mexico.

**APPLICABLE PLANNING AREA(S)**: Central and Eastern Gulf of Mexico.

**FISCAL YEAR(S) OF PROJECT FUNDING**: 1994.

**COMPLETION DATE OF REPORT**: January 1995.

**COST(S)**: FY 1994: \$44,394.

**CUMULATIVE PROJECT COST**: \$44,394.

**PROGRAM MANAGER**: Paul W. Sammarco.

**AFFILIATION**: Louisiana Universities Marine Consortium.

**ADDRESS**: 8124 Highway 56, Chauvin, Louisiana 70344.

**PRINCIPAL INVESTIGATOR(S)\***: Charles M. Tolbert.

**KEY WORDS**: Income inequality; socioeconomics; OCS; Louisiana;
Florida.

**BACKGROUND**: This research contrasts income inequality in an area
with extensive onshore and offshore oil and gas development with a
similar, undeveloped area. Despite growing concerns about the social,
cultural, and economic effects of oil and gas development, there is
relatively little documentation of socioeconomic effects. In view of the
paucity of such research, an income distribution analysis is an
undertaking of the highest priority. One reason for the lack of
socioeconomic research has been the absence of viable data that span
both the expansion and contraction of development off the Louisiana
coast. Some coastal parishes are remote, and some are sparsely
populated. Consequently, the only reliable and valid available data for
such areas are decennial censuses. The release in 1993 of county-level
summary data from the 1990 Census made it possible to develop inequality
measures from three consecutive decennial censuses.

**OBJECTIVES**: 1) To conduct a comparative analysis of coastal income
inequality in 1970, 1980 and 1990; and 2) To conduct a modeling of
income inequality for the same time period. The comparative analysis
contrasts inequality patterns in coastal Louisiana parishes and
panhandle counties of north Florida where there has been little onshore
or offshore activity. Thus, the Florida counties are treated as a
control group contrasted with Louisiana parishes. To maximize the
utility and validity of comparisons, efforts were made to pair and/or
match counties and parishes as closely as possible on relevant baseline
(1970) social, demographic, and economic characteristics.

**DESCRIPTION**: The study areas consisted of all Louisiana parishes
adjacent to the Gulf of Mexico (except Jefferson Parish) and Florida
Panhandle counties adjacent to the gulf from Santa Rosa to Taylor.

The comparative analysis of family income inequality employed parish-
and count-level data from the 1970, 1980, and 1990 Censuses. The focus
of the analysis was trends in family income inequality in coastal
Louisiana parishes adjacent to he substantially developed Outer
Continental Shelf (OCS). The comparative analysis design permitted
inequality trends in Louisiana parishes to be compared to inequality
trends in coastal counties of the Florida panhandle where there has been
no significant OCS development. Inequality trends in the parishes and
counties along the Gulf of Mexico were also compared to state-wide
family income inequality in Louisiana and Florida. The analysis design
permitted a temporal comparison across key decades in the recent history
of the oil and gas industries. While the decade of the 1970s was one of
rising oil prices and greatly expanded industry development, the 1980s
saw prices fall and industry activity decline. This change in
development patterns is an important reason to study inequality trends
in the 1970-1980 and 1980-1990 periods. Following conventions of
inequality analysis, trends in family income inequality were gauged with
multiple measure of inequality computed with decennial census data. The
inequality was then modeled with ordinary least squares and pooled
time-series, cross-sectional estimators.

**SIGNIFICANT CONCLUSIONS**: While Florida inequality primarily moves
downward across time, inequality in Louisiana exhibits a great deal of
volatility and, by 1990, is higher than in 1970 in several cases. The
volatility is uniform across all types of Louisiana households. The
Louisiana patterns indicate a substantial impact of oil and gas
development primarily on coastal families in the middle to upper middle
portions of the income distribution. Variables introduced in inequality
models generally did not eliminate the sharp differences between coastal
Louisiana parishes and panhandle counties of Florida or the volatility
in the Louisiana patterns. Local manufacturing employment in Louisiana,
however, did show some promise, we must look beyond typically important
variable such as education, race, industry mix, and the national
economy. The Louisiana inequality patterns clearly follow the expansion
and contraction of oil and gas industry activity much more than they
follow any factors introduced in our models.

**STUDY RESULTS**: An initial review of per capita income and median
family income figures indicated lower 1970 income in Louisiana parishes
than in Florida counties. By 1980, the income relationship in coastal
areas was reversed with Louisiana parishes generally exhibiting higher
incomes\--some precipitously higher\--than Florida counties. Louisiana
statewide and coastal 1990 incomes, however, were well below those of
Florida. After taking inflation into account, coastal 1990 median family
income levels in Louisiana were actually lower than they were in 1970.

A comparative inequality analysis revealed very different patterns of
income inequality for statewide and coastal areas of Florida and
Louisiana. While Florida inequality primarily tended downward across
time, inequality in Louisiana exhibited a great deal of volatility and,
by 1990, was higher than in 1970 in several cases. The Louisiana
patterns suggest a substantial impact of oil and gas development on
coastal families in the middle to upper middle portions of the income
distribution. There is little evidence to indicate impact on lower
income families.

In the modeling phase of the analysis, we attempted to account for these
inequality patterns by controlling for important factors known to
influence inequality. At best, the models accounted for roughly half the
variance in the observed inequality. Moreover, through the modelling
procedures, we were unable to eliminate the sharp differences between
coastal Louisiana parishes and panhandle counties of Florida or the
volatility in the Louisiana patterns.

**STUDY PRODUCT(S)**: Tolbert, Charles, M. 1995. Oil and Gas Development
and Coastal Income Inequality: A Comparative Analysis. A final report by
Louisiana Universities Marine Consortium for U.S. Department of the
Interior, Minerals Management Service, Gulf of Mexico Region, OCS
Office, New Orleans, LA. Contract No. 14-35-0001-30470. OCS Study MMS
94-0052. 75 pp.

**\*P.I.\'s affiliation may be different than that listed for Program
Manager(s).**