IDEAS home Printed from https://ideas.repec.org/a/oup/rcorpf/v12y2023i4p723-760..html
   My bibliography  Save this article

Energy Transitions and Household Finance: Evidence from U.S. Coal Mining

Author

Listed:
  • Ding Du
  • Stephen A Karolyi

Abstract

Between 2010 and 2020, the U.S. coal industry experienced a 50% drop in production, employment, and active mines, driven by regulatory factors and technological innovation in alternative energy sources. We study the impact of this energy transition on household employment, wages, migration, and home ownership in affected communities. Compared to non-coal-producing, resource-rich counties, coal-producing counties experience 6% and 4% drops in employment and wages, respectively, during this period. Economic mobility and access to banking services significantly moderate these real effects, suggesting a potential role for finance to shape the industrial and economic changes associated with climate transitions. (JEL G20, G50, J61, Q55, Q58)Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Ding Du & Stephen A Karolyi, 2023. "Energy Transitions and Household Finance: Evidence from U.S. Coal Mining," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 12(4), pages 723-760.
    • Handle: RePEc:oup:rcorpf:v:12:y:2023:i:4:p:723-760.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/rcfs/cfac031
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. David Autor & David Dorn & Gordon Hanson & Kaveh Majlesi, 2020. "Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure," American Economic Review, American Economic Association, vol. 110(10), pages 3139-3183, October.
    2. Erik P. Gilje & Elena Loutskina & Philip E. Strahan, 2016. "Exporting Liquidity: Branch Banking and Financial Integration," Journal of Finance, American Finance Association, vol. 71(3), pages 1159-1184, June.
    3. David P. Byrne, Andrea La Nauze, and Leslie A. Martin, 2021. "An Experimental Study of Monthly Electricity Demand (In)elasticity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 205-222.
    4. Mitchell A. Petersen & Raghuram G. Rajan, 2002. "Does Distance Still Matter? The Information Revolution in Small Business Lending," Journal of Finance, American Finance Association, vol. 57(6), pages 2533-2570, December.
    5. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.
    6. Balvers, Ronald & Du, Ding & Zhao, Xiaobing, 2017. "Temperature shocks and the cost of equity capital: Implications for climate change perceptions," Journal of Banking & Finance, Elsevier, vol. 77(C), pages 18-34.
    7. Aymeric Bellon & J Anthony Cookson & Erik P Gilje & Rawley Z Heimer & Stijn Van Nieuwerburgh, 2021. "Personal Wealth, Self-Employment, and Business Ownership [House prices, collateral, and self-employment]," The Review of Financial Studies, Society for Financial Studies, vol. 34(8), pages 3935-3975.
    8. Holladay, J. Scott & LaRiviere, Jacob, 2017. "The impact of cheap natural gas on marginal emissions from electricity generation and implications for energy policy," Journal of Environmental Economics and Management, Elsevier, vol. 85(C), pages 205-227.
    9. Atanasov, Vladimir & Black, Bernard, 2016. "Shock-Based Causal Inference in Corporate Finance and Accounting Research," Critical Finance Review, now publishers, vol. 5(2), pages 207-304, December.
    10. Brett Watson & Ian Lange & Joshua Linn, 2023. "Coal demand, market forces, and U.S. coal mine closures," Economic Inquiry, Western Economic Association International, vol. 61(1), pages 35-57, January.
    11. Bernstein, Asaf & Billings, Stephen B. & Gustafson, Matthew T. & Lewis, Ryan, 2022. "Partisan residential sorting on climate change risk," Journal of Financial Economics, Elsevier, vol. 146(3), pages 989-1015.
    12. Dan Black & Terra McKinnish & Seth Sanders, 2005. "The Economic Impact Of The Coal Boom And Bust," Economic Journal, Royal Economic Society, vol. 115(503), pages 449-476, April.
    13. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, January.
    14. Darwin Choi & Zhenyu Gao & Wenxi Jiang, 2020. "Attention to Global Warming," The Review of Financial Studies, Society for Financial Studies, vol. 33(3), pages 1112-1145.
    15. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    16. Morse, Adair, 2011. "Payday lenders: Heroes or villains?," Journal of Financial Economics, Elsevier, vol. 102(1), pages 28-44, October.
    17. Lee H. Seltzer & Laura Starks & Qifei Zhu, 2022. "Climate Regulatory Risk and Corporate Bonds," NBER Working Papers 29994, National Bureau of Economic Research, Inc.
    18. Erik P. Gilje, 2019. "Does Local Access to Finance Matter? Evidence from U.S. Oil and Natural Gas Shale Booms," Management Science, INFORMS, vol. 65(1), pages 1-18, January.
    19. Linn, Joshua & Muehlenbachs, Lucija, 2018. "The heterogeneous impacts of low natural gas prices on consumers and the environment," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 1-28.
    20. Joseph A. Cullen & Erin T. Mansur, 2017. "Inferring Carbon Abatement Costs in Electricity Markets: A Revealed Preference Approach Using the Shale Revolution," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 106-133, August.
    21. J. Anthony Cookson & Erik P. Gilje & Rawley Z. Heimer, 2020. "Shale Shocked: Cash Windfalls and Household Debt Repayment," NBER Working Papers 27782, National Bureau of Economic Research, Inc.
    22. Meghan R. Busse & Devin G. Pope & Jaren C. Pope & Jorge Silva-Risso, 2015. "The Psychological Effect of Weather on Car Purchases," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(1), pages 371-414.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. J Anthony Cookson & Emily Gallagher & Philip Mulder, 2025. "Coverage Neglect in Homeowner's Insurance," Working Papers 25-09, Federal Reserve Bank of Philadelphia.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cookson, J. Anthony & Gilje, Erik P. & Heimer, Rawley Z., 2022. "Shale shocked: Cash windfalls and household debt repayment," Journal of Financial Economics, Elsevier, vol. 146(3), pages 905-931.
    2. Brett Watson & Ian Lange & Joshua Linn, 2023. "Coal demand, market forces, and U.S. coal mine closures," Economic Inquiry, Western Economic Association International, vol. 61(1), pages 35-57, January.
    3. Bastian, Jacob E. & Black, Dan A., 2024. "Relaxing financial constraints with tax credits and migrating out of rural and distressed America," Journal of Public Economics, Elsevier, vol. 234(C).
    4. Berger, Allen N. & Molyneux, Phil & Wilson, John O.S., 2020. "Banks and the real economy: An assessment of the research," Journal of Corporate Finance, Elsevier, vol. 62(C).
    5. Chang, Yuyuan & He, Wen & Mi, Lin, 2024. "Climate risk and payout flexibility around the world," Journal of Banking & Finance, Elsevier, vol. 166(C).
    6. Janjala Chirakijja & Seema Jayachandran & Pinchuan Ong, 2024. "The Mortality Effects of Winter Heating Prices," The Economic Journal, Royal Economic Society, vol. 134(657), pages 402-417.
    7. Janjala Chirakijja & Seema Jayachandran & Pinchuan Ong, 2019. "Inexpensive Heating Reduces Winter Mortality," NBER Working Papers 25681, National Bureau of Economic Research, Inc.
    8. Rivera, Nathaly M. & Ruiz-Tagle, J. Cristobal & Spiller, Elisheba, 2024. "The health benefits of solar power generation: Evidence from Chile," Journal of Environmental Economics and Management, Elsevier, vol. 126(C).
    9. Wang, Teng, 2021. "Local banks and the effects of oil price shocks," Journal of Banking & Finance, Elsevier, vol. 125(C).
    10. Kacker, Kanishka & Lange, Ian, 2022. "Inter-regional coal mine competition in the US: Evidence from rail restrictions," Energy Economics, Elsevier, vol. 110(C).
    11. Harding, Matthew & Kettler, Kyle & Lamarche, Carlos & Ma, Lala, 2023. "The (alleged) environmental and social benefits of dynamic pricing," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 574-593.
    12. Elizabeth A. Berger & Nathan Seegert, 2024. "Half Banked: The Economic Impact of Cash Management in the Marijuana Industry," Journal of Finance, American Finance Association, vol. 79(4), pages 2759-2796, August.
    13. Ma, Song & Murfin, Justin & Pratt, Ryan, 2022. "Young firms, old capital," Journal of Financial Economics, Elsevier, vol. 146(1), pages 331-356.
    14. Hu, Zhongchen, 2022. "Social interactions and households’ flood insurance decisions," Journal of Financial Economics, Elsevier, vol. 144(2), pages 414-432.
    15. Brehm, Paul, 2019. "Natural gas prices, electric generation investment, and greenhouse gas emissions," Resource and Energy Economics, Elsevier, vol. 58(C).
    16. Knittel, Christopher R. & Metaxoglou, Konstantinos & Trindade, André, 2019. "Environmental implications of market structure: Shale gas and electricity markets," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 511-550.
    17. Shakya, Shasta, 2022. "Geographic networks and spillovers between banks," Journal of Corporate Finance, Elsevier, vol. 77(C).
    18. LaPlue, Lawrence D., 2022. "Environmental consequences of natural gas wellhead pricing deregulation," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    19. Doyle, Matthew & Fell, Harrison, 2018. "Fuel prices, restructuring, and natural gas plant operations," Resource and Energy Economics, Elsevier, vol. 52(C), pages 153-172.
    20. Martti Kaila & Emily Nix & Krista Riukula, 2021. "Disparate Impacts of Job Loss by Parental Income and Implications for Intergenerational Mobility," Opportunity and Inclusive Growth Institute Working Papers 53, Federal Reserve Bank of Minneapolis.

    More about this item

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G50 - Financial Economics - - Household Finance - - - General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:rcorpf:v:12:y:2023:i:4:p:723-760.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/rcfs .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.