Do Firms Adapt to Climate Change? Evidence from Establishment-Level Data

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)33_Other conference paper

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Detail(s)

Original languageEnglish
Publication statusPresented - Sep 2020

Conference

TitleADBI-JBF-SMU Joint Conference on Green and Ethical Finance
LocationOnline
Period16 - 18 September 2020

Abstract

This paper examines firms’ adaptation to long-term changes in climatic conditions. Using detailed information on establishments owned by U.S. public firms from 1990 to 2012, we show that higher abnormal temperatures over the previous five years in a county lead to a significant reduction in local employment and the number of establishments. The decline in employment and establishments is larger for firms in non-tradable sectors and consumer services and retailing industries, and when managers are likely to care more about climate change. In addition, we find that establishments located in abnormally hot counties seek to hire new workers with greater education and IT skills. Further tests show that prolonged high temperatures lead to lower consumption, higher unemployment rate, lower wage, and more out-migration across regions. Our findings suggest that firms’ adaptation is largely due to a decline in local consumer demand rather than lower labor productivity. Overall, we provide large-sample evidence on firm adaptation to climate change and the resultant impacts on firm operations and the local economy.

Research Area(s)

  • Climate change, employment, upskilling, economic establishments, adaptation, abnormal temperatures

Bibliographic Note

Information for this record is supplemented by the author(s) concerned.

Citation Format(s)

Do Firms Adapt to Climate Change? Evidence from Establishment-Level Data. / Jin, Zuben; Li, Frank Weikai; Lin, Yupeng; Zhang, Zilong.

2020. ADBI-JBF-SMU Joint Conference on Green and Ethical Finance
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Research output: Conference Papers (RGC: 31A, 31B, 32, 33)33_Other conference paper