Temperature and Local Industry Concentration

Jacopo Ponticelli, Qiping Xu and Stefan Zeume

No 31533, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We use plant-level data from the US Census of Manufacturers to study the short and long run effects of temperature on manufacturing activity. We document that temperature shocks significantly increase energy costs and lower the productivity of small manufacturing plants, while large plants are mostly unaffected. In US counties that experienced higher increases in average temperatures between the 1980s and the 2010s, these heterogeneous effects have led to higher concentration of manufacturing activity within large plants, and a reallocation of labor from small to large manufacturing establishments. We offer a preliminary discussion of potential mechanisms explaining why large manufacturing firms might be better equipped for long-run adaptation to climate change, including their ability to hedge across locations, easier access to finance, and higher managerial skills.

JEL-codes: G3 L11 O14 Q54 (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-cfn, nep-ene, nep-env, nep-geo and nep-his
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