Temperature and Local Industry Concentration
October 2023
Working Paper Number:
CES-23-51
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.
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:
economist,
production,
market,
macroeconomic,
industrial,
company,
manufacturing,
manufacturer,
produce,
economically,
plant productivity,
industry concentration,
plant employment,
manufacturing plants
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identified to contain references to specific institutions, datasets, and other organizations.
:
Census of Manufactures,
Annual Survey of Manufactures,
Total Factor Productivity,
National Bureau of Economic Research,
Energy Information Administration,
Longitudinal Business Database,
Manufacturing Energy Consumption Survey,
Environmental Protection Agency,
Census of Manufacturing Firms,
1990 Census,
North American Industry Classification System,
Herfindahl Hirschman Index,
Census Bureau Disclosure Review Board,
Herfindahl-Hirschman,
Federal Statistical Research Data Center
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