Climate Change and the Geography of the U.S. Economy

2023-17 | July 1, 2023

This paper examines how the spatial distribution of people and jobs in the United States has been and will be impacted by climate change. Using novel county-level weather data from 1951 to 2020, we estimate the longer-run effects of climate on local population, employment, wages, and house prices using a panel polynomial distributed lag (PDL) model. This model and the long historical data help capture important aspects of local climate changes, such as trends in temperature. The historical results point to long-lasting negative effects of extreme temperatures on each of the outcomes examined. A long lag structure is necessary to appropriately capture the longer-run effects of climate change, as short-run effects are small. Using county-level weather projections based on alternative greenhouse gas emissions scenarios, we use the estimated models to project the spatial distribution of these local economic outcomes out to 2050. Our results point to substantial reallocations of people and jobs across the country over the next three decades, with mobility increasing by between 35 and nearly 100 percent depending on the scenario. Population and employment are projected to shift away from the Sunbelt and toward the North and Mountain West.

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About the Authors
Sylvain Leduc is executive vice president and director of Economic Research at the Federal Reserve Bank of San Francisco. Learn more about Sylvain Leduc
Daniel Wilson is a vice president in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Daniel Wilson