Research
Working Papers
Carbon Offshoring and Manufacturing Cleanup (Job Market Paper)
Production in manufacturing firms in high income countries is generally becoming cleaner. Some of this trend has been shown to be due to adoption of new technologies, but carbon offshoring – i.e. when dirty production at home is replaced with imports of carbon-intensive products from abroad – may be an additional factor. If so, this is concerning, since it risks undermining climate policies by simply moving emissions to countries with laxer regulations. This is the focus of this paper. Leveraging rich Swedish firm-product level data between 2005-2014, and employing a combination of shift-share instrumental variables and a difference-in-difference estimation approach, I find compelling paradox: a 10\% increase in the import of emission-intensive goods can result in firms' production processes becoming 5\% cleaner but increases transport emissions by 2\%. This suggests that carbon offshoring does not only shift emissions elsewhere but also generate new ones (via transportation). Additionally, I show that the type of offshoring, such as foreign direct investment (FDI) has a much larger emissions-reducing effect than offshoring in the form of imports of inputs not produced in-firm. Environment and the Economy: Firm-level responses to energy price shock - (Draft coming soon)
While raising the carbon price is an effective tool for decreasing reliance on carbon-intensive production sources, it has also raised substantial concerns among policymakers that higher energy cost will render manufacturing firms less competitive and potentially lead to increased consumer prices. In this paper, I examined the impact of energy prices on manufacturing firms by using a shift-share instrument and a dynamic difference-in-difference approaches that isolate the exogenous variation in firm-level energy prices. The analysis reveals a dual impact of energy price inflation. On one hand, energy price shock contributes to positive environmental outcomes by reducing energy consumption and CO2 emissions. On the other hand, it exerts detrimental effects on firms' productivity, employment, and the risk of potential carbon leakage. Furthermore, firms demonstrate a propensity to shift the cost burdens to consumers, exacerbating general inflation in the economy. Additional results show that the negative effect on employment affects highly skilled workers disproportionately: employment among workers with university degrees fell considerably in the short run, while those with high school degrees increased. The most affected firms are high-energy intensive and non-EU-ETS firms. Overall, the findings suggest a trade-off between environmental and economic goals due to increasing energy taxes. Local Import Competition and Firm-level Emissions - Joint with Zouheir El‑Sahli (Draft soon)
It is established in the literature that import competition may lead to efficiency gains in the firms facing such competition. It is, however, unclear whether any gains extend to the environmental behavior of the firms. We contribute to the literature by investigating how local import competition, defined at different spatial dimensions within Sweden, may affect emissions by the local producing firms. Using detailed geographical information about the location of all manufacturing firms in Sweden, we find evidence that domestic production becomes more energy efficient when exposed to import competition. This effect wanes with the distance between the producer and the importer. The emissions reduction is driven by productivity spillovers, changes in the product mix, and emissions abatement investment. Work in Progress
Environmental Neglect or Cost Reduction? Impact of Carbon Offshoring on Firms’ Pollution Abatement Joint with Zouheir El‑Sahli
