From Yglesias at Slate
As I wrote yesterday, the economic effects of an increase in labor supply are in some ways ambiguous since in a service economy there are many complementarities. North Dakota, for example, is experiencing an oil boom, which is leading to an overwhelmingly male population boom, which has some strange spillover consequences:
Some women have banked on the female shortage. Williston’s two strip clubs attract dancers from around the country. Prostitutes from out of state troll the bars.Natasha, 31, an escort and stripper from Las Vegas, is currently on her second stint here after hearing how much money strippers made in Williston on a CNN report last year. Business in her industry is much better here than in the rest of the country, she said. She makes at least $500 a night, but more often she exceeds $1,000.“We make a lot of money because there’s a lot of lonely guys,” she said.
An inflow of oilmen, in other words, pushes stripper wages up. The subsequent inflow of strippers naturally tends to push them back down, but that in turn is going to raise the wages of those who provide services that strippers demand—restaurants, hairstylists, whatever—as well as for the bartenders and bouncers who are complementary elements in the production of adult entertainment. The overall moral of the story, I think, is that high nominal wages induced by labor scarcity are not quite the boon that they might first appear. If the Williston area's housing stock and population expanded dramatically—or if the big shale oil find had occured someplace like Buffalo, N.Y., or St Louis where there are already a lot of people—most folks would end up better off....MOREThe second link is to the Jan. 15, 2013 NYT story "An Oil Town Where Men Are Many, and Women Are Hounded".
