Do Local Energy Prices and Regulation Affect the Geographic Concentration of Employment?


Matthew E. Kahn and Erin T. Mansur


      Journal of Public Economics, Volume 101, May 2013, Pages 105-114.

      Working Paper, January 2013.

      NBER Working Paper 16538, November 2010.

      Energy Institute at Haas Working Paper-209.



      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 uses a regression discontinuity approach to examine whether the basic logic of comparative advantage can explain the geographical clustering of U.S. manufacturing. Using a unified empirical framework, we document that energy-intensive industries concentrate in low electricity price counties, labor-intensive industries avoid pro-union counties, and pollution-intensive industries locate in counties featuring relatively lax Clean Air Act regulation. We use our estimates to predict the likely jobs impacts of regional carbon mitigation efforts.