The Impact of Industrial Collapse on Communities: A Case Study of the American Automotive Industry

Open Access
- Author:
- Pusateri, Isabella
- Area of Honors:
- Economics
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Delina E Agnosteva, Thesis Supervisor
Nima Haghpanah, Thesis Honors Advisor
Bee Yan Roberts, Faculty Reader - Keywords:
- Difference-In-Difference
Dynamic Difference-In-Difference
Automotive Industry
Plant Closures
Microeconomic Shocks - Abstract:
- The goal of this thesis is to gain a quantitative understanding of the causal economic impacts of automotive plant closures in the United States on communities. It builds upon existing literature evaluating deindustrialization, creative destruction, and the microeconomic impacts of shocks by evaluating automotive assembly plant closures. To achieve this aim, a Difference-In-Difference analysis is conducted using an automotive assembly plant closure dataset spanning from 1999 to 2016 built by Venkataramani, Bair, O’Brien, and Tsai (2020) and economic data from the Federal Reserve. This analysis finds that there is a statistically significant relationship between plant closures and the socio-economic variables of resident population, median household income, per capita personal income, unemployment rate, percent of people in poverty, and the number of SNAP benefits recipients. Specifically, the model suggests that, in the wake of an automotive assembly plant closure, resident populations remain stagnant for up to six years, median household incomes remain stagnant for three years before returning to a consistent growth rate, per capita personal incomes retain a consistent rate of growth, unemployment rates peak of 2.59 percentage points higher after three years, percents of people in poverty increase by a total of 3.99 percentage points after six years, and the number of Supplemental Nutrition Assistance Program benefits recipients increase by 43,887.31 persons after six years.