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The Canary in the Coal Decline: Appalachian Household Finance and the Transition from Fossil Fuels

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Abstract

We use individual-level credit data to study how recent declines in Appalachian coal mining affected household finances between 2011 and 2018. Using exogenous variation in electricity sector demand for coal, we find declines in coal demand decreased credit scores and increased financial distress within two years of coal shocks. These effects cannot be explained solely by job losses in coal mine worker households. Credit score declines and financial distress were largest among older individuals and people with lower-middle credit scores. Our results suggest the energy transition away from fossil fuels may impose meaningful costs on other fossil fuel extraction communities.

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  • Joshua Blonz & Brigitte Roth Tran & Erin Troland, 2025. "The Canary in the Coal Decline: Appalachian Household Finance and the Transition from Fossil Fuels," Working Paper Series 2023-09, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:95885
    DOI: 10.24148/wp2023-09
    Note: Original publication date: 4/1/2023.
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    3. Colmer, Jonathan & Krause, Eleanor & Lyubich, Eva & Voorheis, John, 2024. "Transitional costs and the decline in coal: worker-level evidence," LSE Research Online Documents on Economics 126795, London School of Economics and Political Science, LSE Library.
    4. Mark, Ebba & Rafaty, Ryan & Schwarz, Moritz, 2024. "Spatial–temporal dynamics of structural unemployment in declining coal mining regions and potentialities of the ‘just transition’," Energy Policy, Elsevier, vol. 195(C).

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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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