Economics: Research Guide

Despite the extensive evidence linking particulate matter exposure to adverse health effects, a significant portion of the global population, especially in low-income countries, continues to depend on highly polluting fuels like wood-burning for cooking and heating. This study evaluates the immediate effects of wood-burning restrictions, triggered by air quality warnings, on levels of fine and coarse particulate matter in the city of Los Angeles, Chile. Employing a regression discontinuity design, we derive plausible causal estimates indicating that wood-burning restrictions significantly reduce daily concentrations of PM10 and PM2.5 during the most severe air quality warning. A battery of a..

Feeding the expanding global population while reducing the environmental impact of farming and food supply is among the main challenges of the century. Cities, which host the large majority of the past decade demographic growth, are at the forefront. They are increasingly considering the relevance of developing policies to explicitly support less-intensive production and/or rebuild their foodshed so as to reduce their reliance on long-distance food transport. In this paper, we develop a spatial theoretical model to describe and discuss both economic and environmental implications of farming practices change and relocation strategies. We highlight that, compared to the market outcome, promoti..

This paper explores how climate risks impact the overall systemic stress levels in the United States (US). We initially apply the TrAffic Light System for Systemic Stress (TALIS) approach that classifies the stock markets across all 50 states based on their stress levels, to create an aggregate stress measure called ATALIS. Then, we utilize a nonparametric causality-in-quantiles approach to thoroughly assess the predictive power of climate risks across the entire conditional distribution of ATALIS, accounting for any data nonlinearity and structural changes. Our analysis covers daily data from July 1996 to March 2023, revealing that various climate risk indicators can predict the entire cond..

Free-Floating Car-Sharing (FFCS) services allow users to rent electric vehicles by the minute without restrictions on pick-up or drop-off locations within the service area of the rental company. Beyond enlarging the choice set of mobility options, FFCS may reduce congestion and emissions in cities, depending on the service’s usage and substitution patterns. In this paper, we shed light on this by analyzing the universe of FFCS trips conducted through a leading company in Madrid during 2019. We correlate FFCS usage patterns with data on traffic conditions, demographics, and public transit availability across the city. We find complementarities between FFCS and public transport in middle-inc..

We study expectations about the energy transition (climate transition beliefs) as drivers of “green” investment decisions and financial performance expectations. In a preregistered survey of U.S. retail investors (N=1, 007), we document considerable heterogeneity in climate transition beliefs at different horizons. More optimistic climate transition beliefs are associated with higher green expected financial performance and investments, especially for investors without strong pro-environmental preferences. A pre-registered information provision experiment (N=3, 003) provides causal evidence of the role of climate transition optimism in investment behavior. By influencing the availability..

Driven by environmental justice activism and policy reforms, recent social science research conducted mostly in the US has documented the greater environmental degradation faced by marginalized communities. Yet, the ethnoracial categories used in these studies may not fully capture environmental inequality in the Global South. This study presents novel findings that quantify and decompose the link between skin tone and ambient air pollution exposure in Colombia, moving beyond conventional race and ethnicity variables. By matching household geolocations with satellite-based pollution measures, we find that skin tone —even more than predetermined ethnoracial categories— predicts both initi..

We characterize optimal urban transportation policies in the presence of congestion and environmental externalities and evaluate their welfare and distributional effects. We present a framework of a municipal government that implements different transportation equilibria through its choice of public transit policies—prices and frequencies—as well as road pricing. The government faces a budget constraint that introduces monopoly-like distortions. We apply this framework to Chicago, for which we construct a new dataset that comprehensively captures transportation choices. We find that road pricing alone leads to large welfare gains by reducing externalities, but at the expense of consumers..

We examine whether a company’s green and high–quality innovative strength is related to its environmental impact and what the implications are for its financial performance. By analyzing WIPO patent data and MSCI ESG data, we reveal a notable positive and statistically significant impact of possessing more green patents on a company’s carbon emissions score. Further, we find that the patent related increase in carbon emissions score is driven by the high–quality green patents. Our analysis validates the positive influence of green and high–quality innovation strength on both the E and ESG scores. Despite the positive impact on the environment, investors do not need to sacrifice ret..

The 2022 energy crisis highlighted the dependence of the European electricity sector on imported natural gas. The European Union adopted measures to reduce gas consumption with peak shaving, energy efficiency, and accelerating the adoption of renewables. We investigate a well-known operational but under-researched issue related to integration of renewables, i.e. the need for conventional generation to ensure system operation requirements (inertia, frequency stability or voltage control) in highly decarbonized systems, which is essential for power system reliability. We analyze the rescheduled supply in Spain in the day-ahead market to respect network constraints, namely ‘redispatching’. ..

We study dynamic cap-and-trade schemes in which a policy of adjustable allowance supply determines the cap on emissions. Focusing on two common supply policies, price and quantity mechanisms, we investigate how the duration of a cap-and-trade scheme affects equilibrium emissions under its cap. More precisely, we consider the reduction in equilibrium emissions realized by shortening the duration of the scheme. We present four main results. First, the reduction in emissions is positive and bounded from below under a price mechanism. Second, the reduction in emissions is bounded from above under a quantity mechanism. Third, these upper and lower bounds coincide when the price and quantity mecha..

Based on a tailor-made survey, we find that experts – academics and civil servants – are much more willing than citizens in Sweden to accept liberty-reducing regulations. Moreover, both citizens and experts are more supportive of regulating negative internalities (in terms of health) than negative externalities (in terms of climate change). While less liberty-reducing policy instruments receive more support, around 20 percent of citizens and experts support very intrusive measures such as non-transferable individual quotas for air travel and unhealthy foods. Both experts and citizens prefer encouraging to discouraging information provision, while experts are more positive than citizens t..

The focus of this report is on child labour, which is a main component of Sustainable Development Goal (SDG) 8.7. After providing a brief background on child labour, this report provides an overview of the factors that research has identified as main contributors to child labor, categorized broadly as either microeconomic factors, macroeconomic factors, or other household factors. Microeconomic factors include household poverty, market imperfections, and the role of education in shaping outcomes while macroeconomic factors include economic growth and globalization. Other relevant parental and household factors are also discussed, such as altruism and cultural norms. The report next provides ..

This paper proposes that strong financial, judicial, and labor market institutions provide comparative advantage in clean industries, and thereby improve a country’s environmental quality. Five complementary tests support this hypothesis. First, industries that depend on institutions are disproportionately clean. Second, strong institutions increase relative exports in clean industries, even conditional on environmental regulation and factor endowments. Third, an industry’s complexity helps explain the link between institutions and clean goods. Fourth, a quantitative general equilibrium model indicates that strengthening a country’s institutions decreases its pollution through relocati..

Resilience is the ability of an entity to manage a destabilizing shock or rise in pressure. The recently published State Resilience Index (SRI) includes ecological resilience along with several other “pillars†of state resilience. Given that indicators of subjective well-being (SWB) are increasingly accepted as a measure of national performance and as a standard for evaluating public policy, this paper investigates whether national SWB scores capture the ecological resilience dimension of national performance. Regression analysis of data for 124 countries reveals that SWB is significantly positively related to the ecological pillar of state resilience as well as some of its sub-pil..

A growing literature in economics uses subjective well-being data collected in surveys as a proxy for utility. Environmental economists have combined these data with the public goods experienced by respondents using a novel non-market valuation approach: the experienced preference approach. In this review, we take stock of what we know, including recent developments, and what we still need to learn about this new approach. We first present a conceptual framework that clarifies the relationship between experienced preference and conventional valuation approaches. We then discuss key challenges for its empirical application and identify areas where additional research would be fruitful.

We report results from a pre-registered field experiment about the impact of index provider engagement on corporate climate policy. A randomly chosen group of 300 out of 1227 international companies received a letter from an index provider, encouraging the company to commit to setting a science-based climate target to remain included in its climate transition benchmark indices. After one year, we observed a significant effect: 21.0% of treated companies have committed, vs. 15.7% in the control group. This suggests that engagement by financial institutions can affect corporate policies when a feasible request is combined with a credible threat of exit.

This article reviews the literature on the economic impacts of disasters caused by extreme weather and climate events to draw lessons on how societies can better manage these risks. While evidence that richer, better governed societies suffer less and recover faster from climate extremes suggests adaptation, knowledge gaps remain, and little is known about the efficiency of specific adaptation actions. I review various "no or low" regrets adaptation options which are recommended when uncertainties over climate change impacts are high. I discuss how governments can play an important role in adaptation by directly providing public goods to manage disaster risks or by facilitating private agent..

High temperatures can have a negative effect on work-related activities because workers may experience difficulties concentrating or have to reduce effort in order to cope with heat. We investigate how temperature affects performance of professional tennis players in outdoor singles matches in big tournaments. We find that performance significantly decreases with ambient temperature. This result is robust to including wind speed and air pollution in the analysis. There are no differences between men and women. However, there is some heterogeneity in the magnitude of the temperature effect in other dimensions. In particular, we find that the temperature effect is smaller when there is more at..

Do environmental conditions pose greater health risks to individuals living in urban or rural areas? The answer is theoretically ambiguous: while urban areas have traditionally been associated with heightened exposure to environmental pollutants, the economies of scale and density inherent to urban environments offer unique opportunities for mitigating or adapting to these harmful exposures. To make progress on this question, we focus on the United States and consider how exposures—to air pollution, drinking water pollution, and extreme temperatures—and the response to those exposures differ across urban and rural settings. While prior studies have addressed some aspects of these issues,..

The EU has embarked on multiple initiatives reflecting its commitment to environmental enhancement and sustainable transitions. Notable among these are the European Green Deal and the NextGenerationEU recovery plan, both pivotal in fostering eco-friendly policies and sustainable practices within the region. Conversely, the fiscal rules within the EU, designed to manage budgetary deficits and debt-to-GDP ratios, may pose challenges to the implementation of fiscal measures targeted at achieving environmental quality objectives. These regulatory constraints potentially curtail the fiscal space available for policies aligned with the environmental goals set forth by the EU. To address this issue..

Although consumers are increasingly willing to pay for the environment, the private provision of public goods from the consumption of green goods remains limited. We propose in this paper to exploit an additional private attribute of green goods, the health benefits, in order to increase the provision of public good. Health can be seen as a positive internality associated with the consumption of some green goods. We show that correcting this internality by offering labels describing these health benefits can increase the supply of public goods. The level of public good remains underprovided from the perspective of a social planner, but, under certain conditions, may equalize or exceed the op..

Using a firm-level dataset from the Spanish Technological Innovation Panel (2003-2016), this study explores the characteristics of environmentally innovative firms and quantifies the effects of pursuing different types of environmental innovation strategies (resource-saving, pollution-reducing, and regulation-driven innovations) on sales, employment, and productivity dynamics. The results indicate, first, that environmental innovations tend to be highly correlated with firms’ technological capabilities, although to varying degrees across types of environmental innovation, whereas structural characteristics are less significant. Second, we observe heterogeneous effects of diffe..

We model investors that take into account the amount of public good that firms produce (e.g., by reducing carbon emissions) when making their portfolio allocation. In an equilibrium asset pricing model with production and public goods provision, we find that environmentally conscious investors invest more than others, invest more in clean firms, and may invest more in dirty firms. Whether clean firms exhibit CAPM alphas depends on the amount of systematic risk of the firm and its relative contribution to the public good. There is underprovision of the public good in equilibrium. Lower government provision may lead to a surge in investment and government provision may be dominated by green su..

In industries with extensive infrastructure needs and pronounced scale economies, consumers can be better served by well-designed regulation than by competition. Regulation that replicates the discipline of competitive markets can enhance the welfare of electricity consumers. However, replicating competitive discipline is challenging when regulators have limited knowledge of relevant industry conditions and when the regulators’ policy instruments are restricted. Incentive regulation attempts to harness the regulated firm’s superior knowledge of industry conditions to achieve regulatory objectives. This paper reviews key principles of incentive regulation, and examines how incentive regul..

Scientific evidence suggests that anthropogenic impacts on the environment, such as land use changes and climate change, promote the emergence of infectious diseases (IDs) in humans. We develop a tworegion epidemic-economic model which unifies short-run disease containment policies with long-run policies which could control the drivers and the severity of IDs. We structure our paper by linking susceptible-infected-susceptible and susceptible-infected-recovered models with an economic model which includes land-use choices for agriculture and climate change and accumulation of knowledge that supports landaugmenting technical change. The contact number depends on shortrun containment policies (..

We use product-level data from 2000 to 2021 to evaluate Norway’s incentives for consumers to choose electric vehicles. These include taxes on fossil fuels, EV exemption from car purchase taxes, and other incentives, like discounts on road tolls. We find that undoing the incentive with the largest effect, the EV exemption from purchase taxes, would reduce the EV market share to 25 percent from the 66 percent observed in 2021, increase CO2 emissions of new cars sold by 170 percent, reduce their total weight by 22 percent, and reduce the number of new cars sold by 10 percent.

This paper provides empirical evidence on the short and long-term sectoral effect of environmental policy stringency on CO2 emissions, exploiting longitudinal data covering 30 OECD countries and more than 50 sectors. The analysis relies on the OECD Environmental Policy Stringency (EPS) index, a composite index tracking climate change and air pollution mitigation policies. Estimates obtained from panel regressions suggest that more stringent environmental policies are associated with lower emissions, that the effect builds over time and differs across sectors depending on their fossil fuel intensity. A one unit increase in the EPS index (about one standard deviation), is associated with 4% lo..

The extent of vehicle ownership is increasing in many developing countries. Most of the increase takes place through import of second-hand vehicles that are usually fuel-inefficient and have poor emissions standards. This is creating enormous environmental pressures, since most developing countries also lack the necessary policies to regulate the sector. This study investigates the effect of a recent policy reform in Ethiopia that aimed at encouraging adoption of cleaner vehicles. In March 2020, Ethiopia introduced a new vehicle excise tax that linked the excise tax rate to engine size and age of vehicles, imposing lower rates on ‘fuel-efficient’ vehicles and higher rates on ‘fuel-inef..

We investigate whether climate activism favors pro-environmental consumption by examining the impact of Fridays for Future (FFF) protests in Italy on second-hand automobile transactions in the strike-affected areas. Leveraging data on 10 million automobile transactions occurring before and after FFF, we exploit rainfall on the day of the events as exogenous source of attendance variation. Our findings reveal that local participation to the events is associated with a reduction in the per capita CO2 emissions of purchased cars, an uptick in the market share of low-emission vehicles and a corresponding decrease in the market share of high-emission counterparts. Notably, we uncover heterogeneou..

High temperatures can have a negative effect on work-related activities. Labor productivity may go down because mental health or physical health is worse when it is too warm. Workers may experience difficulties concentrating or they have to reduce effort in order to cope with heat. We investigate how temperature affects performance of male professional tennis players. We use data about outdoor singles matches from 2003 until 2021. Our identification strategy relies on the plausible exogeneity of short-term daily temperature variations in a given tournament from the average temperature over the same tournament. We find that performance significantly decreases with ambient temperature. The mag..