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Temperature, Adaptation, and Local Industry Concentration

Author

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  • Jacopo Ponticelli
  • Qiping Xu
  • Stefan Zeume

Abstract

We use plant-level data from the U.S. Census of Manufacturers to study the short- and long-run effects of temperature on manufacturing activity. We find that high-temperature shocks significantly increase energy costs and lower productivity for small plants, while large plants are mostly unaffected. Commuting zones with higher increases in average temperatures between the 1980s and the 2010s experience a decline in the number of small plants, reallocation of labor from small to large plants, and higher local labor market concentration. Differences in costs per unit of energy, managerial skills, and access to finance contribute to explaining our results.

Suggested Citation

  • Jacopo Ponticelli & Qiping Xu & Stefan Zeume, 2023. "Temperature, Adaptation, and Local Industry Concentration," NBER Working Papers 31533, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31533
    Note: CF DAE EFG PR
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    Cited by:

    1. Feriga, Moustafa & Lozano Gracia, Nancy & Serneels, Pieter, 2024. "The Impact of Climate Change on Work Lessons for Developing Countries," IZA Discussion Papers 16914, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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