Nora M.C. Pankratz

Working Papers

When Trade Dries Up: Infrastructure Constraints and Firm Performance
2025 NFA Best Paper Award in Corporate Finance

This paper studies the effects of infrastructure constraints on firms and supply chains. Using granular data on firms' shipping routes, I exploit exogenous variation in the capacity of the Panama Canal to test how natural constraints in transportation infrastructure affect the profitability and investment capacity of US firms. I find that a one-standard deviation drop in water availability decreases revenues of an average US firm by 0.5% and operating income by 3%. Drought conditions lead to rising costs, and highly exposed firms experience an increased reliance on trade credit. Consistent with spillover effects, both more and less exposed firms face declines in cash holding. Using data on vessel movement and freight rates, I show that these effects are likely driven by shipping delays and increased fees. Most economies rely on waterways increasingly constrained by drought, and the findings underscore that natural capacity constraints in global supply chains can pose significant risks to the economy.

Mandatory Climate Adaptation: Evidence from Firms’ Investments in Workplace Safety with Patrick Behrer (World Bank) and Jisung Park (U Penn)

Strategies to mitigate the effects of climate change exist, but will firms adopt them? Using large-scale confidential micro-data from worker’s compensation claims, high-frequency weather data, and records of firms’ financial performance, we explore the effects of a mandatory firm adaptation on the adverse consequences of hotter temperature. A workplace heat safety mandate significantly reduces injuries, with no discernible effect on firms’ profits and employment, suggesting that firms may not operate at the Pareto frontier when it comes to investing in adaptation.

Local Labor Market Conditions and Adaptation to Climate Change: The Role of Workers' Outside Options with Jisung Park (U Penn), Patrick Behrer (World Bank), and Paul Stainier (U Penn)
This study examines the impact of local labor market conditions on workplace adaptation to extreme temperatures. Leveraging administrative data on 6 million injury claims and granular information on workers' outside options, we find that improvements in outside option wages significantly mitigate heat-related workplace injuries, with a one standard deviation increase reducing injury sensitivity by 33% to 47%. In contrast, adaptation appears minimal when measured through average climate exposure despite significant climate variation in our setting, suggesting that localized labor market dynamics play an important role in shaping workplace responses to environmental shocks and the incidence of adaptation costs between workers and employers.

Temperature, Workplace Safety, and Labor Market Inequality  with Jisung Park (U Penn), Patrick Behrer (World Bank)

Using data covering the universe of injury claims from the nation's largest worker's compensation system, we explore the relationship between temperature and workplace safety and its implications for labor market inequality. Hotter temperature increases workplace injuries significantly, causing approximately 20,000 injuries per year. The effects persist in both outdoor and indoor settings and for injury types ostensibly unrelated to temperature consistent with cognitive or cost-related channels. The risks are substantially larger for men versus women; for younger versus older workers; and for workers at the lower end of the income distribution, suggesting that accounting for workplace heat exposure may exacerbate total compensation inequality.