How Does Climate Change Reshape U.S. Entrepreneurship? A Labor Channel

65 Pages Posted: 7 Jun 2024

Date Written: March 01, 2024

Abstract

This paper documents a labor channel through which climate change affects U.S. entrepreneurship. I find that unexpected extreme heat discourages the creation of new firms and jobs, particularly in highly exposed industries. The findings result from significant heat risks to the health and productivity of exposed workers, leading to increased labor-related production and financing costs for new businesses. Nevertheless, entrepreneurs who still start businesses in heat-exposed industries are typically of higher quality, and their businesses are more likely to survive and grow more rapidly in the long run. Overall, this research underscores the profound impact of climate change on U.S. entrepreneurial activities across industries and counties.

Keywords: Climate Change, Extreme Heat, Entrepreneurship, Jobs, Labor Costs, Small Business Loans. JEL Codes: G30, L26, J20, Q54

Suggested Citation

Xiao, Zhanbing, How Does Climate Change Reshape U.S. Entrepreneurship? A Labor Channel (March 01, 2024). Available at SSRN: https://ssrn.com/abstract=4856853 or http://dx.doi.org/10.2139/ssrn.4856853

Zhanbing Xiao (Contact Author)

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

HOME PAGE: http://www.zhanbingxiao.com

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