Working Papers
Environmental Gentrification
(Draft available upon request)
Abstract: Policies that are designed to reduce environmental damages have the goal of protecting the environment while promoting efficiency and pursuing equity in their distribution of benefits and costs. This paper measures the differential welfare impacts of environmental policies across household groups. To account for property market responses and re-optimization of residential housing decisions, a dynamic model of housing decisions with endogenous tenure status (renting vs. owning) and forward-looking residents is used. The model extends the distributional analysis in four previously overlooked dimensions: differential impacts of property market appreciation on renters and owners, preference heterogeneity over public amenities, wealth accumulation corresponding to property market changes, and expectations in dynamic housing decisions. The model is estimated taking advantage of an exogenous and unexpected environmental shock and employing a unique data set (L.A.FANS Data) tracking residents locations and tenure choices in Los Angeles County from 2000 to 2007. The results show that environmental improvements have regressive welfare impacts and favor owners more than renters. Welfare impacts can be reduced for renters and can be changed from positive to negative for low-income renters incorporating housing market responses and residential sorting. In contrast, owners of all incomes benefit more due to the capitalization of environmental improvements incorporating housing market responses. Provided that renters are more likely to be low-income earners and people of color, the differential welfare results in this paper raise the concern of environmental justice in policy design and evaluations.
Presented at AERE Summer Conference, AREUEA National Conference, CU Environmental and Resource Economics Workshop, Camp Resources XXVI, Urban Economic Association (UEA) Annual Conference, Western Economic Association (WEAI) Annual Conference, Southern Economic Association (SEA) Annual Conference, ASSA Annual Conference
Inequality, Displacement and the Consequences of Environmental Improvements, with Christopher Timmins
Abstract: Environmental policies aimed at reducing pollution can unintentionally exacerbate environmental injustice through residential sorting. This study examines the effects of environmental improvements on various demographic groups in Los Angeles County after an environmental shock using an instrumental variables approach. Results indicate that lower-income renters and people of color tend to relocate to more polluted neighborhoods and experience shifts in employment and income. Homeowners often remain in improved neighborhoods, benefiting from enhanced environmental quality and property values. Housing tenure and racial identity have profound influence on the distributional impacts of environmental policies, highlighting the role of residential sorting on environmental justice.
Presented at NBER SI Environmental & Energy Economics, Camp Resources XXV, Southern Economic Association (SEA) Annual Conference, ASSA Annual Conference
Fired Up or Burned Down: Wildfires and VC Investment, with Joy Tianjiao Tong and Zhengchu Zhang
(Draft available upon request), under review
Abstract: Using novel data on wildfires and smoke, we examine the behaviors of Californian venture capitalists (VCs) and VC-backed startups following such events. Employing exogenous climate change-induced wildfires as a natural experiment, we compare outcomes for firms located within fire zones to those that are not. We find that venture capitalists increase their investments in ESG-oriented startups after experiencing wildfires and smoke, although their total investment amount declines. We also distinguish the effects of wildfires from those of smoke, revealing differential impacts on investment behavior. For VC-backed startups, our results show an increase in green patent production following wildfires. However, wildfires have detrimental effects if encountered during the nascent stage of the startup.
Presented at Canadian Economics Association (CEA) Annual Conference, Western Economic Association (WEAI) Annual Conference
Lost Green Leaders: Is China’s Green Financial Regulations Efficient? with Qi Pan and Xiaoming Xie
Revise and Resubmit, International Journal of Industrial Organization
Abstract: We examine China's Green Credit Policy, a green finance instrument incentivizing firms' environmental performance through conditional financial support. Using firm-level longitudinal data and a difference-in-differences design, we find that while the ratio of green innovation increased annually by 2.3%, the quality, measured by patent citations, declined by 0.079. Low-quality green innovations, while secured financial support, crowded out other sectors and caused negative spillover effects. Analyzing the effects of the green credit policy across firms at varying distances from the green technology frontier, we identify misalignment and inefficiency in green credit allocation. Firms with stronger green innovation capabilities experienced a more pronounced decline in both the quantity and quality of green innovations.
Presented at Southern Economic Association (SEA) Annual Conference, NAREA EJ Circle, HKUST brownbag
Publications
“The Impact of Internet Sales Tax in a Search Model of Money: Some Analytical Results,” with Tiantian Dai, Shenyi Jiang, Xiangbo Liu, Annals of Economics and Finance, Society for AEF, Vol 17, Issue 1, 133-144.
"The Enduring Impacts of Payments for Ecosystem Services in China: Short- and Long-run Adjustments in Industry Structure," with Qi Pan, accepted at Journal of Environmental Economics and Management