Alaska without Petroleum: A Preliminary Run of a Gendanken Experiment

Abstract

For the purposes of this study, I have used a simple economic base model to describe the structure of the Alaska economy.1 In the model each component of the economic base (the economic drivers) supports a certain number of jobs and generates a certain amount of personal income, not only directly but also through indirect and induced effects. All of the jobs and income in the economy are then accounted for when the contribution of each component of the economic base is included. The jobs and income attributed to a component of the economic base represents the potential loss to the economy if that part of the base were to disappear. For example, mining is an important industry in Alaska, consisting almost entirely of primary production for export outside the state. The contribution of the mining sector to total Alaska employment consists of miners as well as workers at Alaskan businesses that supply goods and services to the mining industry and workers at Alaskan businesses that supply goods and services to the families of the miners and workers at the Alaskan supplier businesses. If all of the mines in the state were to close, the loss in jobs and income would include those at the businesses supplying the mines and the families of the workers.