Aircraft noise pollution adversely affects physical and mental health. We break new ground on quantifying the resulting losses, capitalized into housing prices, and evaluating the efficacy of national noise abatement policies by disentangling the causal effect of noise across soundproofing-eligible and ineligible Minneapolis homes. Combining a repeat-sales sample with data on aircraft noise pollution (1990-2014), we find that aircraft noise persistently reduces the rate of appreciation of abatement-ineligible properties, while eligible homes are unaffected. We approximate the average losses around $25,000 per sale and find that the return on abatement investments could be as a high as 40% in Minneapolis.
This survey is of the growing body of research investigating the economic development effects of transport infrastructure expenditures, and seaport investments in particular. Summarizing the various methodologies and empirical results, our review of this literature suggests that the estimated investment effects are generally positive and that there is considerable disagreement on the magnitude of the resulting earnings, productivity and employment benefits. The estimated impacts of seaport investments are particularly contentious. We identify cross-border investment benefit leakages as one potential determinant and find that the sparse literature on this topic delivers key insights that deserve more attention going forward.
The U.S. trade deficit has been growing for over 25 years and has been accompanied by enlarging freight rate differentials. While traditional models of trade have ignored these gaps assuming symmetry across all bilateral trade costs, the specific linkages between trade imbalances and international transportation costs have remained unexplored. Given the current trade policies, the implications arising from the endogenous adjustment of bilateral transport costs to policy-induced changes in the U.S. trade deficit, for example, are of particular importance. To break new ground on this issue, we develop and estimate a model of international trade and transportation that accounts for the effects of persistent trade imbalances. The theoretical results are supported by our empirical analysis and indicate that bilateral transport costs adjust to a country's trade imbalance. The implication is that a unilateral import policy, for example, will cause spillover effects into the bilaterally integrated export market. To illustrate, we use our empirical results to simulate the anticipated spillover effect from the Chinese ban on waste imports. We find that China's ban and the projected 1.5% rise in the U.S. trade deficit will not only lead to a 0.77% reduction of transport costs charged on U.S. exports to China, but also a 0.34% increase in transport costs on U.S. imports from China.
In this study, we estimate the overall impact of the novel Coronavirus pandemic on Chinese exports and differentiate the hypothesized `triple pandemic effect' across its three components: 1) the domestic supply shock; 2) the international demand shock; and 3) the effects of Global Value Chain (GVC) contagion. We find that Chinese exports are very sensitive to the severity of the global Coronavirus outbreaks. Average export elasticity estimates with respect to new Chinese and foreign destination country infections range from -2.5 to -4.6. Against a Covid-19-free counterfactual, our estimates predict that the pandemic has reduced Chinese exports by as much as 40% to 45% during the first half of 2020, but that these losses have peaked and are expected to partially recover by the end of the year. Moreover, we find that all three shocks contribute to the pandemic-induced reduction in Chinese exports, but that GVC contagion exerts the largest and most persistent influence explaining these losses. Among the three shocks, the impact of GVC contagion explains around 75% of the total reduction in Chinese exports, while the domestic supply shock in China accounts for around 10% to 15% and the international demand shock only explains around 5% to 10%. As a result of these varying transmission channels, the pandemic effects appear to be very distinct from those explaining the Great Trade Collapse in 2008-09
What drives the resilience of international trade against increasingly destructive natural disasters? In this study, I investigate the dynamics and spatial distribution of Hurricane Katrina's trade effects across U.S. infrastructure and break new ground on the mechanisms underlying the static and dynamic trade resilience. Analyzing port-level data, I find that ports subject to this calamity experience significant and lasting trade reductions, while shipments handled by the adjacent ports increase by as much as 13,000%. Interestingly, the duration of this rerouting effect is persistent for eight years uncovering novel path dependencies and providing important policy insights in light of recent events.
As evidenced by recent events, natural disasters are increasingly potent and cause significant disruptions to international trade. I investigate the impact of Hurricane Katrina and the resulting rerouting of international trade on employment and factor prices in otherwise unaffected Floridian communities. Developing a new identification strategy that exploits the disaster-induced quasi-random variation in trade, my IV results are the first to quantify the urban economic impact of international cargo shipments and suggest that a 10% increase in seaport services raises factor prices and employment by 0.46% to 0.69%. Consistent with the predictions of the urban equilibrium theory, I find that the productivity-enhancing effects in traded goods-producing industries and transportation sectors drive the estimated intensive margin effects of transport infrastructure. As natural disasters are not the only cause of changing shipping patterns, my findings have considerable relevance for trade and other public policies that shape the affected urban equilibria.
Aircraft noise pollution adversely affects physical and mental health. Previous research quantifies the costs of this disamenity through the losses that are capitalized into home values. Much of this research relies heavily on spatially restrictive noise contour plots to identify the house price discounts and determine economic damage. We break new ground on this subject by investigating whether actual residential noise complaints more accurately measure the aircraft noise pollution and housing price impacts experienced by residents near Minneapolis-Saint Paul International Airport. Our novel findings indicate that noise complaints are a reliable measure of residential noise annoyance and have a significant adverse effect on home prices that extends nearly twice as far (10 km) as the contour estimates. Reevaluating the economic damages based on our results provides consistent evidence that contour-based calculations severely underestimate the aircraft-noise-pollution-induced losses incurred by homeowners and suggest that $154 million of $167 million in post-abatement damages are borne by residents located outside the regulated Minneapolis contour area.
Environmental degradation raises the frequency of natural disasters, and the growing reliance on global value chains exposes domestic labor markets to the ripple effects of these international calamities. To date, we know relatively little about such implications for U.S. labor markets. We leverage the significant disruption of Puerto Rican production and exports due to Hurricane Maria to study the spillover effects on employment in mainland U.S. labor markets. We find that the reduction in Puerto Rican import competition raises U.S. employment and the number of manufacturing establishments, particularly among chemical and pharmaceutical sectors with the highest level of industry exposure.
This paper examines the effects of natural disasters on FDI, considering the case of India. Our analysis evidences persistent investment reductions in affected regions following a disaster as well as lasting positive investment spillovers into unaffected Indian regions. We show that these intra-national shifts in multinational firms’ investment patterns are non-random and tend to flow into more developed regions with more skilled labor and greater market potential. Combined, our findings suggest that natural disasters may permanently increase the ``risk factor" of investing in affected regions, while systematic FDI spillovers may help explain the prominent divergence in India's regional economic growth.
Concerns about the lingering novel Coronavirus could have led to long-term structural change in desired dwelling locations in large U.S. cities. Densely concentrated neighborhoods may be at higher risk of contagion, encouraging more individuals to move out. We investigate whether this potential pandemic-induced reduction in demand has adversely affected real estate prices of one- or two-family properties across New York City. First, OLS hedonic results indicate that greater case numbers are concentrated among neighborhoods with lower-valued properties. Second, as an identification strategy we use a repeat-sales approach for the period 2018-2020, and find that sale prices fall by nearly $100,000 or around 10% for every 1,000 additional infections per 100,000 residents in a given MODZCTA. Based on cumulative MODZCTA infection rates through mid-2020, the estimated COVID-19 price discount ranges from approximately 7% to nearly 50% in the most affected neighborhoods. Finally, we consider the relationship between the number of cases and the number of sales in a neighborhood. Our Poisson process shows a negative relationship between case numbers and sales volumes as well as a notable compositional shift. The highest value properties experience an increase in sales as case numbers rise, while properties priced below the pre-COVID median report relatively fewer sales with more cases. This is indirect evidence on how COVID impacted the distribution of homeowner wealth across differently priced houses, as those with greater housing wealth before COVID were able to enhance wealth during the pandemic, while the opposite occurred for the owners of the lowest priced homes.
In this study, we estimate the impact of the novel Coronavirus on Chinese exports and differentiate the hypothesized `triple pandemic effect' across its three components: 1) domestic supply; 2) international demand; and 3) Global Value Chain (GVC) contagion. We find that Chinese exports are very sensitive to the severity of the domestic and international outbreaks and that all three shocks contribute to the pandemic-induced losses in trade. GVC contagion exerts the largest influence explaining around 75% of total losses, while the international demand shock overturns after one month. Consequently, the estimated pandemic effects are distinctly different from the 2008-09 GTC.
Work in Progress
“Trade, Natural Disasters and the Role of Seaport Infrastructure.” (with Gan Qi Tang*).
“International Disaster Spillovers and the Role of Global Value Chains: Evidence from Japan” (with Daijiro Yokota*)
"When the Trade War Hits Close to Home: A GVC Analysis of the U.S-China Trade War" (with William Sandy*)
"Refusing welfare gains: A study of FDA import refusal practices in the United States" (with Claire Buehler*)
"The Resilience of Air vs. Seaborne Trade: Intermodal differences in the Response to Natural Disasters"
Note: * indicates undergraduate student collaborator