Working Paper: NBER ID: w16538
Authors: Matthew E. Kahn; Erin T. Mansur
Abstract: Manufacturing industries differ with respect to their energy intensity, labor-to-capital ratio and their pollution intensity. Across the United States, there is significant variation in electricity prices and labor and environmental regulation. This paper uses a regression discontinuity approach to examine whether the basic logic of comparative advantage can explain the geographical clustering of U.S. manufacturing. Using a unified empirical framework, we document that energy-intensive industries concentrate in low electricity price counties, labor-intensive industries avoid pro-union counties, and pollution-intensive industries locate in counties featuring relatively lax Clean Air Act regulation. We use our estimates to predict the likely jobs impacts of regional carbon mitigation efforts.
Keywords: No keywords provided
JEL Codes: L16; L38; L6; Q43; Q54; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower electricity prices (L94) | energy-intensive industries clustering (R32) |
| labor regulations (J88) | labor-intensive industries location decisions (R32) |
| environmental regulations (Q58) | pollution-intensive industries location decisions (L99) |
| lower electricity prices (L94) | increased employment in energy-intensive industries (L79) |
| less stringent Clean Air Act regulations (L98) | increased employment in pollution-intensive industries (Q52) |