|
|
Research
The Indirect Effects of Hurricanes: Evidence from Firm Internal Networks
Job Market Paper
Draft | Slides
Are the effects of hurricanes spatially mitigated or propagated by firms through their internal network of establishments? This paper quantifies the indirect spatial impacts of hurricanes by examining linkages that arise between disrupted and undisrupted regions via plant ties within firms. For a typical county hit by a hurricane in the United States, for every manufacturing job lost upon exposure, I estimate that an additional 0.19 to 0.25 manufacturing jobs are lost across undisrupted distant regions due to spatial propagation within multi-plant firms. Additionally, I find that the adverse employment and investment spillovers only occur within resource-constrained firms, while productivity losses are consistent with mechanisms of managerial distraction within the firm. Overall, the results indicate that we potentially underestimate the effects of hurricanes by ignoring inter-regional linkages emerging from firms' internal networks.
Propagating Formality via Value Added Networks: Evidence from India
(with Juan Rios)
A major challenge faced by governments in developing countries is to increase their tax base by formalizing the economy. In this paper, we investigate whether Value Added Taxes (VAT) can increase formality. Firms in the VAT scheme have incentives to buy inputs from formal suppliers to collect input tax rebates. Therefore, informal upstream businesses in the supply chain may want to formalize in order to sell to the downstream firms in the VAT. Using administrative records from the state of Karnataka, India, we document that small firms are willing to pay 1% to 4% higher taxes to join the VAT regime. Only firms operating in upstream sectors, such as manufacturing and wholesale, are paying this "VAT Premium", consistent with the mechanism explored in this paper.
Environmental Disasters and Stock Market Performance
Do environmental disasters affect company stock performance? The extent to which markets respond to disaster onsets depends on the extent to which stock prices incorporate key information on the firms' adaptive capacity, in the midst of increasingly calamitous and uncertain disaster patterns and reduced insurability. Employing an event study methodology, I study daily stock data of publicly listed firms in the United States and their responses to the top 122 US natural disasters between 1980-2014. I find that exposed companies are associated with stock market valuations that are 0.3 to 0.7 percentage points lower relative to the returns of non-exposed companies. The estimated impact translates into US$9 million to US$22 million lost in the market valuation of exposed firms, with the larger losses occuring further away from the day of the disaster. Firms operating a large number of subsidiaries are able to mitigate these impacts to some extent, but labor market frictions play no role in explaining these negative impacts.
|
|
|
|
