This paper estimates indirect benefits of improved air quality induced by hydraulic fracturing, or "fracking" in the continental United States. The recent increase in natural gas supply led to displacement of coal-fired electricity by cleaner natural gas-fired generation. Using detailed spatial panel data comprising the near universe of air quality monitors merged with US power plant locations, we find that coal generation decreased by 28% attributable to lower natural gas prices. Using an IV identification strategy to isolate fracking's impact on natural gas prices, we identify a 4% decrease in average PM 2.5 levels due to decreased coal generation. These benefits vary geographically; air pollution levels decreased most in parts of Alabama by 35%. Back of the envelope calculations imply accumulated health benefits of roughly $17 billion annually.

Previous estimates indicate that COVID-19 led to a large drop in the number of operating businesses operating early in the pandemic, but surprisingly little is known on whether these shutdowns turned into permanent closures and whether small businesses were disproportionately hit. This paper provides the first analysis of permanent business closures using confidential administrative firm-level panel data covering the universe of businesses filing sales taxes from the California Department of Tax and Fee Administration. We find large increases in closure rates in the first two quarters of 2020, but a strong reversal of this trend in the third quarter of 2020. The increase in closures rates in the first two quarters of the pandemic was substantially larger for small businesses than large businesses, but the rebound in the third quarter was also larger. The disproportionate closing of small businesses led to a sharp concentration of market share among larger businesses as indicated by the Herfindahl–Hirschman Index with only a partial reversal after the initial increase. The findings highlight the fragility of small businesses during a large adverse shock and the consequences for the competitiveness of markets.

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We would like to thank Isabel Guzman at the California Governor's Office of Business and Development, and Irena Asmundson at the California Department of Finance for earlier help with the data. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the CDTFA. All results have been reviewed to ensure that no confidential information is disclosed. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Estimating Indirect Benefits: Fracking, Coal and Air Pollution *This paper estimates indirect benefits of improved air quality induced by hydraulic fracturing, or "fracking". The recent increase in natural gas supply led to displacement of coal-fired electricity by cleaner natural gas-fired generation. Using detailed spatial panel data comprising the near universe of US power plants, we find that coal generation decreased by 28%. Further, fracking decreased local air pollution by an average of 4%. We show that benefits vary geographically; air pollution levels decreased by 35% in the most affected region. Back of the envelope calculations imply accumulated health benefits of roughly $17 billion annually.