Dynamics of Engineering Labor Markets: Petroleum Engineering and Responsive Supply

Engineering shortage claims are based on a number of assumptions that we are able to examine empirically through a “natural experiment” in the case of petroleum engineers. The assumptions are that demand outpaces supply; the increasing offshore supply of scientists and engineers constitutes a “competition” with the U.S.; the size of the stock of engineers drives innovation (which, in turn, drives economic growth and social prosperity); and supply will depend on (a) stimulating interest and achievement of domestic students, and (b) increasing foreign supply/guest workers. In this paper, we examine the common policy assumptions that: (1) the supply of engineers in other countries is a “threat” to U.S. innovation and competitiveness, (2) that labor markets do not function adequately to produce the requisite supply of engineers to meet industry demand, and (3) that guest workers/students are necessary to meet U.S. employer needs for their permanent workforces. Through this study of petroleum engineering, we examine the responsiveness of the educational engineer market