Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282493 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10805
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Fossil fuels have shaped the European economy since the industrial revolution. We use new long-run panel data to analyse the effect of both, coal and oil on economic growth between 1900 and 2015, exploiting variation at the level of European NUTS2 and NUTS3 regions. We show that the reversal of fortune of coal regions resulted from the second energy transition. Specifically, an "oil invasion" in the early 1960s turned regional coal abundance from a blessing into a curse. Human capital accumulation contributed to this reversal of fortune and fully explains the negative effects until today. Moreover, we find substantial heterogeneity between former coal regions that is in line with Glaeser's "reinvention hypothesis": regions with a higher skill-level adjusted much better to the decline of coal. In particular, we show that coal regions with a higher urban density before 1800 were much more resilient than others.
Subjects: 
coal
oil invasion
second energy transition
education
reinvention
growth
JEL: 
O13
O44
Q32
N14
R10
I25
Document Type: 
Working Paper
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