Coal busts and urban recovery: Evidence from China

Haoran Zhang

Regional Science and Urban Economics, 2023, vol. 101, issue C

Abstract: In this paper, we investigate the effects of a coal bust on urban growth. Using a difference-in-differences framework, we find that China's 2012–2015 coal bust significantly reduced the growth rate of local GDP, especially in coal producing cities located far from the coast or seaports. This negative growth effect decreased one year after coal prices had recovered, but the level of the effect remained relatively persistent. The results of further analysis show that regional economies adjust to adverse shocks primarily through a reduction in urban employment and the exit of small and geographically disadvantaged firms, as the decrease in wages during a bust is insufficient to attract an inflow of firms and capital.

Keywords: Coal bust; Industry-specific shocks; Economic growth; Urban recovery (search for similar items in EconPapers)
JEL-codes: O13 Q32 R11 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:101:y:2023:i:c:s016604622300056x

DOI: 10.1016/j.regsciurbeco.2023.103921

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