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Abstract:
A rapid decarbonisation of the United States economy is expected to disproportionately impact regions historically embedded in domestic fossil fuel production. For decades, social scientists have documented the economic and human toll of deindustrialisation, foreshadowing the transitional risks that these regions may face amidst decarbonisation. However, econometric studies evaluating the magnitude, duration, and spatial distribution of unemployment impacts in declining mining regions remain scarce, despite their pertinence to policymaking. Therefore, using econometric estimation methods that control for unobserved heterogeneity via two-way fixed effects, spatial effects, heterogeneous time trends, and grouped fixed effects for a panel of 3,072 US counties covering 2002–2019, we demonstrate that coal mine closures induce a contemporaneous rise in county unemployment rate with spatial ripple effects. Furthermore, evidence of local-level resilience to such shocks over a two-year time horizon is weak. To further account for county-level heterogeneity, we construct a typology of coal counties based on qualities theorised to be resilient to industrial decline. Our findings suggest the significant potential of investing in alternative sectors in localities with promising levels of economic diversity, retraining job seekers, providing relocation support in rural areas, and subsidising childcare in places with low female labour force participation.
