Transitional costs and the decline in coal: worker-level evidence

Colmer, Jonathan, Krause, Eleanor, Lyubich, Eva and Voorheis, John (2024) Transitional costs and the decline in coal: worker-level evidence. CEP Discussion Papers (CEPDP2049). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

The outside options available to workers critically determine the transitional costs of labor demand shocks. Using comprehensive administrative data, we examine the worker-level effects of the decline of coal - a regionally concentrated labor demand shock that reduced employment by more than 50% between 2011 and 2021. We show that coal workers experienced very large, persistent earnings losses compared to similar workers less connected to coal. In contrast to worker-level analyses of labor demand shocks in more spatially diffuse industries, we show that non-employment is an important margin through which adjustment operates. Workers also earn substantially lower earnings when employed. Moving between industries or regions does little to mitigate losses. Instead, we observe significant increases in SSDI receipt. Our findings suggest that transitional costs are higher in regionally concentrated industries when skills do not easily transfer across sectors.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2024 The Author(s)
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor
JEL classification:	J - Labor and Demographic Economics > J0 - General J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q4 - Energy
Date Deposited:	24 Feb 2025 10:57
Last Modified:	24 Feb 2025 11:27
URI:	http://eprints.lse.ac.uk/id/eprint/126795

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