Research

Source: Climate Art Project

Working Papers

Barriers within Borders: Climate Change, Market Barriers, and the Reversal of Structural Transformation [DRAFT AVAILABLE ON REQUEST]

Abstract

This paper examines how climate change is hindering structural transformation in India and the role of internal trade barriers in it. I combine local temperature effects on productivity, consumption, and labor shares with a static spatial equilibrium model to evaluate the potential for labor reallocation out of agriculture as an adaptation to climate change. My empirical findings show that temperature has a more negative impact on agricultural productivity than on manufacturing (supply-side effect), and household expenditure on food increases as incomes fall, consistent with Engel’s law (demand-side effect). Rising temperatures also increase the agricultural labor share, hindering structural transformation. Districts in India could mitigate against the adverse effects of declining agricultural productivity through inter-district trade. Using a market access variable created by using development of Indian highways, I find that improved market access does not disrupt the positive relationship between temperature and agricultural labor share. I find that trade barriers reduce spatial competition among buyers and traps labor in low-productivity agriculture. I then calibrate a spatial equilibrium model with internal trade barriers to Indian data. Counterfactual analysis reveals that removing state-level trade barriers in Indian agriculture will increase income by 4.65% on average for each household and decrease agricultural labor share by 0.1pp on average for each district (~ 28.9 million people across India).

Stumped by the Sun, Saved by the Side: How do teams adapt to heat? Evidence on Peer Adaptation

Abstract

How do teams respond to temperature when individual productivity declines? A large body of literature documents that heat deteriorates individual performance. However, workers rarely work in isolation. Using high-frequency data from international cricket games, this paper examines how heat affects team production. I first document a decline in individual productivity of about 1.46% - 2.68% for every degree Celsius increase in temperature, consistent with the literature. In contrast, I find that equilibrium output remains unaffected by heat. To understand this puzzle, I decompose equilibrium outcomes into individual, peer, and adversarial components and introduce a temperature-based split-sample variance decomposition to compare these components across hotter and cooler environments. The results show that the importance of peer interactions increases significantly under heat, while adversarial interactions remain unchanged. Further analysis shows that this adaptation operates through complementarity in skills. Back-of-the-envelope calculation finds that complementary peer interaction compensates about 45% of the decline in individual productivity.

Works in progress

  • Quantifying the global trade leakage under the EUDR policy (with Matthieu Stigler)

  • Climate Change and Mechanization of Agriculture in India (with Bhavya Srivastava)

  • Climate Change and Informal Insurance Networks (with Matthew Gordon)

Book Chapters