DP18710 Do Firms Mitigate Climate Impact on Employment? Evidence from US Heat Shocks
Using establishment-level data, we document that firms operating in multiple U.S. counties respond to heat-related damages by reallocating employment and job postings as well as moving new establishment openings, from affected to unaffected locations. The reallocation intensifies with heat-related damage severity being acute, chronic and compounded with other natural disasters, and is especially pronounced among larger, financially stable firms with ESG-oriented investors. Overall, multi-establishment firms act as a ``heat insulator’’ for the economy by reducing the impact of heat shocks on aggregate employment, wage growth, labor force participation, and establishment entry, even as their reallocation response redistributes economic activity spatially.
