High skilled workers gain from face to face interactions. If the skilled can move at higher speeds, then knowledge diffusion and idea spillovers are more likely to reach greater distances. This paper ...measures the knowledge creation consequences associated with the construction of China's high speed rail (HSR) network that connects mega cities, that feature the nation's best universities, to secondary cities. Since bullet trains reduce cross-city commute times, they reduce the cost of face-to-face interactions between skilled workers who work in different cities. Using a database listing research paper publication and citations, we document a complementarity effect between knowledge production and the transportation network. When connected by the HSR, co-author productivity rises, new co-author pairs emerge and more highly productive scientists migrate to the HSR cities.
Megacity growth in the developing world is fueled by a desire to access their large local labor markets. Growing megacities suffer from high levels of traffic congestion and pollution, which degrade ...local quality of life. Transportation technology that allows individuals to access the megacity without living within its boundaries offers potentially large social benefits, because individuals can enjoy the benefits of urban agglomeration while not paying megacity real estate rents and suffering from the city’s social costs. This paper presents evidence supporting the claim that China’s bullet trains are playing this role. The bullet train is regarded as one of the most significant technological breakthroughs in passenger transportation developed in the second half of the 20th century. Starting in 2007, China has introduced several new bullet trains that connect megacities such as Beijing, Shanghai, and Guangzhou with nearby cities. Through facilitating market integration, bullet trains will stimulate the development of second- and third-tier cities. By offering households and firms a larger menu of location alternatives, bullet trains help to protect the quality of life of the growing urban population. We document that this transport innovation is associated with rising real estate prices in the nearby secondary cities.
Over the last 30 years, China's economy has boomed. This trend has lifted hundreds of millions of Chinese out of poverty but it has also sharply increased local, regional, and global pollution ...levels. We look at the rise in air pollution over recent decades, and the perhaps surprising finding that in many of China's urban areas, levels of particulates (of less than 10 microns) have been decreasing during the last 10 to 15 years. We then turn to the costs and tradeoffs of air pollution, including costs to human health, reductions in worker productivity, and how people are seeking to reduce their exposure to pollution as shown by compensating differentials in real estate prices and purchases of masks and air filters. We discuss how rising incomes tend to raise the demand for environmental amenities and thus increase political pressure for environmental protection, and then we turn to the policy tools that China has used to reduce pollution. We conclude by arguing that as China's government is preparing for an additional 300 million people to move to urban areas over the next 30 years, it will have a number of opportunities for China to reduce pollution through a shift from manufacturing to services, along with various steps to improve energy efficiency and resource conservation. Overall, it seems that China is on track to improve its environmental performance in the years ahead.
Urban China's high level of ambient air pollution lowers quality of life and raises mortality risk. China's wealthy can purchase private products such as portable room air filters that offset some of ...their pollution exposure risk. Using a unique data set of Internet purchases, we document that households invest more in masks and air filter products when ambient pollution levels exceed key alert thresholds. Richer people are more likely to invest in air filters, which are much more expensive and more effective than masks. Our findings have implications for trends in quality of life inequality in urban China.
China's ongoing urban economic growth has sharply increased the population's per capita income, lowered the count of people living below the poverty line, and caused major environmental problems. We ...survey the growing literature investigating the causes and consequences of China's urban pollution challenges. We begin by studying how urban population and industrial growth impacts local pollution levels and greenhouse gas production. As the urban population grows richer, its demand for private transportation and electricity sharply increases. Such privately beneficial activity exacerbates urban pollution externalities. Facing these severe environmental challenges, China's urbanites increasingly demand quality of life progress. We survey the emerging literature investigating the demand for environmental progress in China. Progress in mitigating externalities hinges on whether the powerful central and local governments choose to address these issues. We analyze the political economy of whether government officials have strong incentives to tackle lingering urban externalities. We conclude by discussing future research opportunities at the intersection of environmental and urban economics.
"Nudges" are being widely promoted to encourage energy conservation. We show that the popular electricity conservation "nudge" of providing feedback to households on own and peers' home electricity ...usage in a home electricity report is two to four times more effective with political liberals than with conservatives. Political conservatives are more likely than liberals to opt out of receiving the home electricity report and to report disliking the report. Our results suggest that energy conservation nudges need to be targeted to be most effective.
A revelatory study of how climate change will affect
individual economic decisions, and the broad impact of those
choices Selected by Publishers Weekly as
one of its Top Ten books in Business and ...Economics for Spring
2021 It is all but certain that the next century will be
hotter than any we've experienced before. Even if we get serious
about fighting climate change, it's clear that we will need to
adapt to the changes already underway in our environment. This book
considers how individual economic choices in response to climate
change will transform the larger economy. Using the tools of
microeconomics, Matthew E. Kahn explores how decisions about where
we live, how our food is grown, and where new business ventures
choose to locate are impacted by climate change. Kahn suggests new
ways that big data can be deployed to ease energy or water
shortages to aid agricultural operations and proposes informed
policy changes related to public infrastructure, disaster relief,
and real estate to nudge land use, transportation options, and
business development in the right direction.
At political boundaries, local leaders have weak incentives to reduce polluting activity because the social costs are borne by downstream neighbors. This paper exploits a natural experiment set in ...China in which the central government changed the local political promotion criteria and thus incentivized local officials to reduce border pollution along specific criteria. We document evidence of pollution progress with respect to targeted criteria at province boundaries. Heavy metal pollutants, not targeted by the central government, have not decreased in concentration after the regime shift. Using data on the economic geography of key industrial water polluters, we explore possible mechanisms.
Customers who adopt solar panels can reduce their energy bills and lower the effective average electricity prices they pay. When the price falls, a solar consumer might consume more electricity than ...before – a solar rebound effect. We provide the first empirical evidence of residential solar rebound effects in the U.S. We use household level hourly and daily electricity meter data as well as hourly solar panel electricity generation data from 277 solar homes and about 4000 non-solar homes from 2013 to 2017 in Phoenix Arizona. Using matching methods and a fixed effects panel regression approach, we find that when solar electricity generation increases by 1 kWh, solar homes increase their total electricity consumption by 0.18 kWh. This indicates that solar rebound effects are estimated at 18%. Building upon our theoretical framework, the increase in consumer surplus from solar panel adoption is estimated at $972/yr.
We study the long-term impact of climate change on economic activity across countries, using a stochastic growth model where productivity is affected by deviations of temperature and precipitation ...from their long-term moving average historical norms. Using a panel data set of 174 countries over the years 1960 to 2014, we find that per-capita real output growth is adversely affected by persistent changes in the temperature above or below its historical norm, but we do not obtain any statistically significant effects for changes in precipitation. We also show that the marginal effects of temperature shocks vary across climates and income groups. Our counterfactual analysis suggests that a persistent increase in average global temperature by 0.04 °C per year, in the absence of mitigation policies, reduces world real GDP per capita by more than 7 percent by 2100. On the other hand, abiding by the Paris Agreement goals, thereby limiting the temperature increase to 0.01 °C per annum, reduces the loss substantially to about 1 percent. These effects vary significantly across countries depending on the pace of temperature increases and variability of climate conditions. The estimated losses would increase to 13 percent globally if country-specific variability of climate conditions were to rise commensurate with annual temperature increases of 0.04 °C.
•We study the long-term impact of climate change on cross-country economic activity•Growth is affected by persistent changes in temperature relative to historical norms•Growth effects vary based on pace of temperature increases and climate variability•The marginal effects of temperature shocks vary across climates and income groups.•Abiding by the Paris Agreement goals limits future income losses substantially
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