Research
Job Market Paper
Technology and the Geography of Industrial Policy
Abstract Industrial policy around the world is increasing targeting sectors heterogeneously across regions to account for sectoral agglomeration externalities. This paper provides the first theoretical framework for when such spatial targeting is optimal. I demonstrate that the optimal approach depends on the underlying productivity structure. When productivities are Hicks-neutral (input neutral), optimal industrial subsidies are higher in regions with larger sector sizes. However, when productivities are Harrod-neutral (labor augmenting), the optimal policy is a constant ad-valorem wage subsidy across all regions. I apply this framework to manufacturing in England using data on 153 regions, exploiting variation in local industrial composition to estimate the productivity structure and agglomeration elasticity. In the Hicks-neutral case, place-based policies yield welfare gains of 5.1% compared to 2% from uniform subsidies. In the Harrod-neutral case, uniform subsidies increase welfare by 3.1% compared to -0.7% with place-based approaches. The estimation reveals predominantly Hicks-neutral production, supporting place-based over uniform policies for manufacturing in England.
Works in Progress
Geography, uncertainty, and the cost of climate change with Jordan-Rosenthal Kay
Abstract Uncertainty regarding the rise in global temperatures increases the expected welfare cost of climate change if the welfare function is convex in temperature. We focus on how the geography of the climate shock interacts with geographic adaptation forces (trade and migration) to determine the shape of welfare response to climate change. We demonstrate theoretically that adaptation forces dampen convexity in damage functions, but the strength of these adaptation forces depends on the spatial distribution of the climate shock. Integrating over different climate scenarios, uncertainty amplifies the welfare loss from climate change. The geography of welfare loss, incorporating climate uncertainty, concentrates previously unaccounted for excess losses in the developing world, alongside the United States and some regions in Europe. These excess damages are highly spatially correlated, because adaptation forces through trade and migration display a strong gravity relationship in the data.
Federal taxes in a spatial economy