Do local energy prices and regulation affect the geographic concentration of employment?

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 examines whether the basic logic of comparat...

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Bibliographic Details
Published in:Journal of public economics 2013-05, Vol.101, p.105-114
Main Authors: Kahn, Matthew E., Mansur, Erin T.
Format: Article
Language:English
Subjects:
Electricity
Electricity prices
Energy market
Energy prices
Manufacturing
Manufacturing employment
Pollution
Public economics
Regulation
U.S.A
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Summary: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 examines whether the basic logic of comparative advantage can explain the geographical clustering of U.S. manufacturing. We document that energy-intensive industries concentrate in low electricity price counties and labor-intensive industries avoid pro-union counties. We find mixed evidence that pollution-intensive industries locate in counties featuring relatively lax Clean Air Act regulation. •Energy intensive industries concentrate in low electricity price counties.•Labor-intensive industries avoid pro-union counties.•Comparative advantage helps to explain geographic clustering of U.S manufacturing.
ISSN:0047-2727
1879-2316
DOI:10.1016/j.jpubeco.2013.03.002