How storms and heat waves affect migration within the U.S.
In this paper, Bilal and Rossi-Hansberg analyze how agents, who anticipate the effect of climate change on productivity and capital depreciation, make forward-looking migration and local capital investment decisions. The authors develop a general equilibrium dynamic quantitative spatial model of the 3,143 counties in the U.S. economy. Some of their conclusions:
- Anticipation of adverse weather has small average effects on welfare but leads to large increases in migration flows, and large changes in the geography of investment, as workers and capitalists correctly anticipate the persistence of climate damages in particular regions.
- Accounting for the effect of temperature on capital depreciation, through the impact of more frequent storms, is essential to obtain more accurate estimates of the welfare losses of climate change. In particular, the impact of climate on capital depreciation magnifies the U.S. aggregate welfare costs of climate change twofold to nearly 5% in 2023 under a business-as-usual warming scenario.
- In the U.S., migration also has a very small average impact on welfare, but it leads to substantial increases in the dispersion of worker and capitalist welfare across locations; worker movements increase the losses in the value of capital at locations harmed by climate change.
Anticipating Climate Change Across the United States
Authors: Adrien Bilal, Esteban Rossi-Hansberg
From: Harvard University, University of Chicago
