Victoria Wenxin Xie
Ph.D. Candidate – Department of Economics
Job Market Paper
"Labor Market Adjustment under Extreme Heat Shocks: Evidence from Brazil"
How do extreme heat shocks affect immediate hiring, layoff, and job reallocation over the medium run for manufacturing workers? Despite rich evidence on the contemporaneous labor-productivity impact of heat shocks, little is known about what happens to employment over time. In a large-developing-country context, this paper provides worker-level evidence on different labor-market adjustment margins with respect to extreme heat shocks and the underlying transmission mechanism. First, exploiting rich employer-employee matched data (RAIS), I find that quarterly heat shocks lead to significant increases in the propensity of manufacturing-worker layoff. To separately identify the importance of the direct labor-productivity channel among many potential transmission mechanisms, I combine detailed municipality-level agricultural census and crop calendars to isolate heat shocks during the local nongrowing seasons. One extra day with daily mean temperature beyond 31 Degree Celsius during the nongrowing seasons increases the probability of layoff by 0.8 percentage points, equivalent to a 11% increase in the baseline layoff propensity. Second, consistent with the direct labor productivity channel, the impact of heat shocks is stronger for workers engaging in more routine manual-intensive tasks. Third, tracking individuals across job spells, I provide evidence on worker job reallocation. There is limited intersectoral and interregional reallocation for manufacturing workers. A significant proportion of manufacturing workers who experienced heat-related layoffs fail to find any formal employment within 36 months. These results show that heat shocks lead to persistent negative employment effect in the formal manufacturing labor market due to failure in job transitions over the medium run. Transmission-mechanism insights also point to efficient labor-force adaptation strategies and inform a more comprehensive cost assessment of climate-change damages.
Working Papers
"Heterogeneous Firms under Regional Temperature Shocks: Exit and Reallocation" Presented at the ASSAs (Philadelphia, 2018) and WEAI (2017)
Are less productive firms in developing countries disproportionately affected by climate change both along the intensive and extensive margin? This paper provides an answer in the context of Indonesia using gridded daily weather data and the Indonesian firm-level survey, the Statistik Industri. In a heterogeneous firm model with capital-biased productivity, I incorporate the thermal stress channel and illustrate how less productive firms decide on production and re-optimize factor intensity as temperature increases. Empirically, I highlight the presence of survival bias intrinsic to firm-level intensive margin analysis. I found that: First, under heat shocks, the initially less productive firms are more likely to exit. Second, on the aggregate, resources reallocate from less to more productive firms within industries. Among surviving firms, we observe factor substitution from unskilled to skilled workers, and firms switching from domestic to foreign intermediate input when temperature increases. The initially more productive firms that survived also incur output gain under heat shocks possibly due to shifts in market structure and/or selection. These evidences highlight the importance of incorporating the manufacturing sector in the damage functions of traditional Integrated Assessment Models such as DICE/FUND. It also provides a potential explanation as to why poor countries are more affected by temperature shocks from the perspective of firm size distribution.
Research in Progress
"Cross-Border Supply Chains and Natural Disasters: The Role of Search Friction", with Xiao Ma and Natalia Ramondo
How do natural disasters around the world affect cross-border production processes and what role does search friction play in transmitting these shocks? Estimating the welfare losses due to environmental shocks from the perspective of the global supply chain is increasingly important as natural disasters become more common and severe under climate change. The literature has so far focused on domestic firm networks and parent-affiliate relationships when studying the transmission of shocks along the production process. In this paper, we develop a novel microdata set on cross-border supply chains using U.S. Customs' Bill of Lading documents and the global establishment-level database from Dun & Bradstreet. We observe transaction-level data from all suppliers of each U.S. importer, with rich establishment-level information on both the foreign suppliers and the U.S. importers. We then link the establishment location with the international disaster database EmDat using coordinates to exploit different intensities of natural disasters at the subnational-level. With the linked firm, Customs and global disaster data at fine geographic resolution and high frequency, we empirically examine heterogeneity in international supplier substitution, harvesting, consignee learning, and structurally derive welfare implications for the cost of climate change on the global production processes.
"Mining Activity and Spatial-Temporal Dynamics of Forest Cover Loss", with Ran Goldblatt, Gordon Hanson, and Amit Khandelwal
How did the global commodity boom of the 2000s affect land use and forest management around the world? Because mining sites often are in remote locations, little is known about the connection between mineral extraction and the surrounding environment. So far, the relation between mining activities and land cover dynamics has been addressed mostly through local observational analysis. In this project, we employ a spatial and temporal lens, by collecting proprietary data on more than 30,000 mines located around the world and matching the location of these mines to high-resolution satellite imagery from the year 2000 forward. This allows a granular study of the relationship between exploration of different mining commodities and loss of forest cover worldwide, as well as the spatial distribution of global mines in relation to changes in land use patterns, socio-economic variables and other physical attributes. Combining annual microdata on the location and intensity of worldwide mining activities with satellite-image-trained data on deforestation, we found significantly positive elasticity of deforestation with respect to major commodity prices, with more pronounced impact concentrated in poor countries.
"The Global Commodity Boom and Water Quality in the U.S"
"Environmental Shocks and Evolving Comparative Advantage under Heterogeneous Adaptation"
"Production Fragmentation and Market Power"
Policy-Related Papers
"Sharing the Burden: Household-Level Evidence on Fiscal Consolidation in the European Union", with Sophia Chen and Deniz Igan