Job Market Paper

Cross-Border Transmission of Climate Policies through Global Production Networks

Climate policies do not operate in isolation but propagate through global production networks, affecting industries beyond national borders. This paper combines international input-output data with a granular instrumental variable approach to capture how foreign regulations transmit through upstream and downstream linkages. Distinguishing between market-based policies, non-market regulations, and technology support, the analysis shows that foreign climate policies can enhance domestic productivity, with effects shaped by industry characteristics and operating through technological adjustment along supply chains. The results underscore the importance of accounting for international spillovers when evaluating the economic impact of environmental regulation.

Working Papers

Climate Policy and International Capital Reallocation (with Xiang Li), Revise & Resubmit at Journal of Financial Stability 

This study employs bilateral data on external assets to examine the impact of climate policies on the reallocation of international capital. We find that the stringency of climate policy in the destination country is significantly and positively associated with an increase in the allocation of portfolio equity and banking investment to that country. However, it does not show significant effects on the allocation of foreign direct investment and portfolio debt. Our findings are not driven by valuation effects, and we present evidence that suggests diversification, suasion, and uncertainty mitigation as possible underlying mechanisms.

Globalization, Productivity Growth, and Labor Compensation (with Christian Dreger & Oliver Holtemöller), submitted

Since the onset of globalization, production activities have become increasingly fragmented and organized in global value chains, facilitating the trade of intermediaries across industries and countries. In this paper, we analyze the dynamic effect of increasing participation in global value chains on both productivity growth and the functional income distribution. To account for potential endogeneity, we construct a granular instrumental variable for international trade integration using detailed international input-output tables. Our findings show on the country-industry level, that both trade in intermediate inputs and trade in value-added significantly raise productivity in advanced countries, at the expense of the labor share of income. Moreover, labor shares decline more sharply in both manufacturing and services sectors, as well as in industries positioned closer to the final stages of the global value chain. Finally, our results show that a decline in international trade integration would have substantial negative effects on long-term productivity growth.

Work in Progress

International Trade and Inequality - Evidence from China (with Oliver Holtemöller & Yanqun Zhang), draft available soon

We explore the development of income and wage inequality in China since 2000 and estimate the effect of international trade on income distributions in provinces and prefecture cities. Firstly, we show that increasing export activities lead to a decreasing labor share of income by using both static panel regressions and local projections. To account for the endogenous nature of variables capturing trade, we use geographic features of prefecture cities as instrument. Secondly, we find evidence that the relationship between export orientation and wage inequality is heterogeneous across personal characteristics by using several waves of Chinese household survey data (CHIP). Finally, we show that the impact of export shares on different quantiles of the wage distribution varies for urban, rural, and migrant workers by using a recentered influence function approach.