Research

Working Papers

"Investor Origin and Deforestation: Evidence from Global Mining Sites", with Ran Goldblatt and Wei You, [Paper], Revise and Resubmit, Review of Economics and Statistics

Abstract: Does mining activity lead to deforestation? How does investor origin affect the environmental externalities of mining operations? We investigate these questions by estimating the causal impact of demand-driven mineral price booms on deforestation near mining sites on a global scale. Combining mine property-level data with high-resolution satellite imagery on forest cover, we find a positive elasticity of deforestation to mineral price shocks. This elasticity is lower when mine owners are from higher-income countries, but it is not affected by host country characteristics. The mechanism is consistent with mine owners from higher-income countries inducing different types of local economic activity.

“Expecting Floods: Firm Entry, Employment, and Aggregate Implications”, with Ruixue Jia and Xiao Ma, [Paper]

Abstract: Flood events and flood risk have been increasing in the past few decades and have important consequences for the economy. Using county-level and ZIP-code-level data from the United States during 1998–2018, we document that (1) increased flood risk has a large negative impact on firm entry, employment, and output in the long run; and (2) flood events reduce output in the short run while their impact on firm entry and employment is limited. Motivated by these findings, we construct a spatial equilibrium model to characterize how flood risk shapes firms’ location choices and workers’ employment, which we use to estimate the aggregate impact of increased flood risk on the economy. We find that flood risk reduced U.S. aggregate output by 0.52% in 2018, 80% of which stemmed from expectation effects and 20% from direct damages. We also apply our model to study the distributional consequences and forecast the impact of future changes in flood risk. Our results highlight the importance of considering the adjustment of firms and workers in response to risk in evaluating the consequences of natural disasters.

"Do Resource Rents Drive Urbanization and Structural Transformation? A Global Analysis", with Qing Huang and Wei You, [Paper]

Abstract: This paper provides the first causal estimate of the impact of mineral price changes on population and industrial structure in a global sample of cities. We find that increases in the prices of minerals extracted from nearby mines lead to employment reallocation away from agriculture and primarily toward low-skilled services, without crowding out manufacturing activities. While the city population grows, there is limited evidence for mining booms driving large-scale urbanization. Cities in Sub-Saharan Africa exhibit exceptionally strong responses to mining booms. These results suggest that resource-led structural transformation could present a new development path for resource-rich developing countries.

“Extreme Weather and Low-Income Household Finance: Evidence from Payday Loans”, with Shihan Xie and Xu Zhang, [Paper]

Abstract:  This paper explores the impact of extreme weather exposures on the financial outcomes of low-income households. Using a novel dataset comprising individual-level payday loan applications and loan-level information, we find that both extreme heat and cold days lead to surges in payday loan demand. Extra extreme heat days result in an increase in delinquency and default rates and a reduction of total credit issued, indicating a contraction in loan supply. The effects are especially noticeable for online payday loans. Our findings highlight the heightened financial vulnerability of low-income households to environmental shocks and underscore the need for targeted policies. 


Selected Work in Progress

“Do Information and Communication Technologies Empower Female Workers? Firm Evidence from Vietnam”, with Natalie Chun and Heiwai Tang

Publication

"Labor Market Adjustment under Extreme Heat Shocks: Evidence from Brazil", 2024, Journal of Economic Behavior and Organization, vol. 222: 266-283. [WP] [Published Version] 

Abstract: Despite ample evidence on the labor productivity impact of heat shocks, little is known about how heat shocks affect labor adjustment over time. This paper uses administrative employer-employee linked data from Brazil to examine margins of labor market adjustment to extreme heat. Tracking workers over time and across job spells, I find that quarterly heat shocks increase the probability of formal manufacturing layoffs. In the medium run, there is limited intersectoral and interregional reallocation, as well as a significant failure rate to reallocate back to formal sectors, indicating job transitional costs. Finally, the employment impact of heat shocks is larger for workers in more routine manual task intensive, less abstract occupations.

"Heterogeneous Firms under Regional Temperature Shocks: Exit and Reallocation, with Evidence from Indonesia", 2024, Economic Development and Cultural Change, vol.72(2): 659-690. [Paper]

Abstract: Are less productive firms in developing countries disproportionately affected by climate change? Using firm-level data from Indonesia, I find less productive firms are more likely to exit the surveys when temperature rises. Second, there is relative output redistribution to the initially more productive firms. The results are consistent with a heterogeneous firm model with skill-biased production function, where heat disproportionately affects unskilled labor productivity. Finally, surviving firms switched to using more skilled labor and more imported inputs. These results illustrate how climate change affects firms of different initial productivity and how various margins of firm-level adjustment could mitigate such effects.