Deindustrialization, Decarbonization and Climate Investment: A Green Bullet for a Rusty Belt?
Working Paper
Abstract: Market interventions are a frequent lever for governments to ease the costs of economic transformations. Green industrial policy (GIP) is a recent example of such policy, seeking to ease the costs of the ecological transition. It is an open question, however, if governments benefit from the provision of GIP. My central claim is that rather than GIP being a tool against climate change alone, it is better considered as one against deindustrialization. This broader conceptualization provides insights into the spatial variation of GIP’s electoral consequences: GIP is more likely to win the incumbent votes in places with increased risk and exposure to deindustrialization, namely along the dimensions of globalization and decarbonization. Hence in communities doubly-pressured by both dimensions, GIP implementation is an effective tool to win back voters ``left-behind’’ and at risk of further economic precarity. I test this argument using geo-located data from the Inflation Reduction Act, leveraging variation in investment status in November 2024 for identification in a difference-in-differences framework. The absence of general electoral impact masks substantial heterogeneity: doubly-pressured communities shifted 2-3 p.p. towards the Democrats after receiving investment. I complement these national level results with a case study of Michigan. Fine grained voting data, planning documents, candidate statements, and local news coverage corroborate the differential response to GIP in these doubly-pressured areas, but not elsewhere.
Recommended citation: Pike, Ryan. (2025). Deindustrialization, Decarbonization and Climate Investment: A Green Bullet for a Rusty Belt? Working Paper.
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