Spatial-temporal dynamics of employment shocks in declining coal mining regions and potentialities of the 'just transition'

TL;DR

This paper quantifies the employment impacts of coal mine closures in US counties, revealing significant unemployment increases and spatial effects, and proposes targeted policies for economic recovery and just transition in affected communities.

Contribution

It introduces a comprehensive econometric analysis of mine closure effects and develops a novel typology of coal counties to inform policy for just transition strategies.

Findings

Mine closures increase unemployment rates by 0.056 percentage points per year.

Spatial effects amplify unemployment impacts by four times.

Recovery prospects depend on economic diversity and social support measures.

Abstract

The United States, much like other countries around the world, faces significant obstacles to achieving a rapid decarbonization of its economy. Crucially, decarbonization disproportionately affects the communities that have been historically, politically, and socially embedded in the nation's fossil fuel production. However, this effect has rarely been quantified in the literature. Using econometric estimation methods that control for unobserved heterogeneity via two-way fixed effects, spatial effects, heterogeneous time trends, and grouped fixed effects, we demonstrate that mine closures induce a significant and consistent contemporaneous rise in the unemployment rate across US counties. A single mine closure can raise a county's unemployment rate by 0.056 percentage points in a given year; this effect is amplified by a factor of four when spatial econometric dynamics are considered. Although this response in the unemployment rate fades within 2-3 years, it has far-reaching effects in its immediate vicinity. Furthermore, we use cluster analysis to build a novel typology of coal counties based on qualities that are thought to facilitate a successful recovery in the face of local industrial decline. The combined findings of the econometric analysis and typology point to the importance of investing in alternative sectors in places with promising levels of economic diversity, retraining job seekers in places with lower levels of educational attainment, providing relocation (or telecommuting) support in rural areas, and subsidizing childcare and after school programs in places with low female labor force participation due to the gendered division of domestic work.