We model a competitive labour market where firms choose combinations of workers and hours per worker to produce output. If one assumes that the scale of production has no impact on hours per worker, then the change in the number of workers and hours per worker resulting from a minimum wage are inversely related. We demonstrate that total hours worked at the firm may rise for plausible parameter values if there are small fixed costs to hiring workers. Thus, in contrast to the conventional view, we show that the effect of minimum wages on employment is ambiguous. -- Minimum wages ; hours ; employment
AbstractWhile in the early part of the nineteenth-century Jamaica was one of the world's leading sugar producers, the abolition of slavery, the flooding of sugar markets with cheap European beet sugar, and the equalization and finally elimination of sugar import duties across the British empire led to a need for more efficient ways to produce sugar. However, it has been widely noted that Jamaica sugar estates were late in adopting more efficient production techniques, arguably due to inadequate financing. This paper investigates what role the destructive forces of hurricanes may have played in inducing Jamaica to finally modernize its sugar production. To this end, we combine a geo-referenced exhaustive data set of Jamaican sugar estates with a measure of localized hurricane damage constructed from historical hurricane tracks over the period 1882 to 1930. Our econometric analysis shows that hurricane strikes increased the probability that a surviving estate upgraded its sugar processing technology, particularly when the price of sugar was high and the price of the other main exporting crop (bananas) was low. Additionally, while a government hurricane loan programme working through local loan banks did help plantations to adopt new machinery, this depended on the damage not being too large.
AbstractWe investigate whether disasters can lead to innovation. We construct a US county-level panel of hurricane damages using climate data, hurricane tracks, and a wind field model and match these to patent applications by the location of their inventor over the last century in the United States. We examine both general innovation and patents that explicitly mention the terms 'hurricane' or 'storm.' In line with the current literature that hypothesizes innovative activity driven by shocks, in particular innovation intended to mitigate future shocks, we find that hurricanes lead to temporary boost in damage-mitigating patents a few years after the event. However, we also show there is long-term, lasting over two decades, general reduction of innovation after a damaging storm. We conclude that hurricanes, and possibly other types of disasters, cannot be viewed as a 'benefit in disguise,' and that these events are unlikely to generate longer-term beneficial dynamics in an adversely affected location.
Abstract This study investigates whether extreme heat episodes (heat waves) have contributed to the development of air conditioning (AC) technology in the United States. To this end, we use weather data to identify days at which heat and relative humidity were above levels comfortable to the human body, and match these with patent data at the county level for nearly a hundred years. We find that in the 2 years after a county has experienced extreme heat AC patents increase. Overall, average extreme heat exposure results in an increase of 7.5% greater innovation. We find no similar increase in the frequency of non-AC-related patent filings, and therefore conclude that heat waves result in innovation targeting their mitigation.
Significance Statement The possibility of more extreme heat because of global warming has raised the question of whether society will be able to invent new technology to adapt to the likely greater frequency and severity of heat waves. The purpose of this paper is to consider the development of air conditioning in the United States and investigate whether extreme heat has indeed driven innovation in cooling technology. It is shown that, in counties with episodes of extreme heat, the number of air conditioning patents filed increased in the aftermath of these episodes, but that this increase was short-lived.
AbstractWe investigate the vulnerability of tax revenue and its various sources to hurricane damages. To this end, we construct a monthly panel of hurricane losses, tax revenue, and its components, tax rates, and gross domestic product (GDP) for eight Eastern Caribbean countries over 14 years. Panel vector autoregressions (VAR) show that following a hurricane, any effects are generally short term. The cumulative expected loss in total tax revenue is 5.3%. Revenue derived from international trade and transactions and domestic goods and service are the most negatively affected. Countries with higher value added, as well as international trade and transactions tax rates, appear to be able to buffer the negative impact better, whereas higher property taxes amplify the negative impact of damaging hurricanes on this revenue source.
This paper investigates the impact of tropical storms on government debt accumulation and decomposition. To this end, we combine quarterly debt data and tropical storm loss data for the period 1993–2013 for the Eastern Caribbean. Our econometric results show that damaging storms cause debt to increase up to three quarters after the event, where this increase can be considerable for damaging enough storms. Much of this increase in debt is due to borrowing from foreign lenders by the central government. At the same time, there is also some shifting of the share of debt toward public corporations, although these tend to react more by financing from domestic sources.
AbstractHurricanes act as large external shocks potentially causing considerable damage to agriculture in the Caribbean. While a number of studies have estimated their historic economic impact, arguably the wider community and policy makers are more concerned about their future risk and potential losses, since this type of information is useful for disaster preparedness and mitigation strategy and policy. This paper implements a new approach to undertaking a quantitative wind risk and loss assessment of agriculture in Caribbean island economies. The authors construct an expected loss function that uses synthetically generated, and historical, hurricane tracks within a wind field model that takes cropland exposure derived from satellite data into consideration. The results indicate that expected wind losses are potentially large but vary considerably across the region, where the smaller islands are considerably more likely to be negatively impacted. Moreover, we find that the structure of the agricultural sector can be important in terms of vulnerability.
