New manufacturing plants being built because of the Inflation Reduction Act and the CHIPS and Science Act could narrow the education earnings gap near where the plants are built, if the US shale boom is any indication.

A new report from the Cleveland Fed says the IRA and the CHIPS Act, both passed in August 2022, are injecting billions into the construction of new manufacturing plants. Like investments sparked by the shale boom, those new plants could increase demand for non-college-educated labor near where they are being built, areas that are often small labor markets.

It's too early to assess the impact of those bills, but the shale boom could provide an indication: In counties where the number of horizontally drilled shale wells doubled (typically over four years), non-college workers saw employment grow by 11.2% and earnings grow by 5.9%. That compares to 8.6% and 3.8%, respectively, for college-educated workers.

Read the Economic Commentary:Can the IRA and CHIPS Act Reduce Labor Earnings Inequality? Lessons from the US Shale Boom