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José-Luis Cruz

I am a S.V. Ciriacy-Wantrup Postdoctoral Fellow at the University of California at Berkeley in the Department of Agricultural and Resource Economics.

I study the local economic consequences of global warming and the efficiency of environmental policies through the lens of spatial dynamic models, accounting for a number of adaptation mechanisms and pursuing a fine level of geographical and industrial resolution.

In Fall of 2023, I will join the Federal Reserve Bank of New York as a Research Economist within the Research and Statistics Group.

You might download my CV here.

Contact information

Department of Agricultural and Resource Economics

University of California at Berkeley

301 Giannini Hall, Berkeley, CA 94720

cruzjl@berkeley.edu

(609) 874-3366

Research

Job Market Paper

Abstract:  Global warming is a phenomenon expected to have heterogeneous effects across geographic locations and economic sectors. To assess its welfare consequences and the reallocation of workers across different markets, I develop a dynamic economic model with the patterns of structural transformation and spatially distinct labor markets facing varying exposure to warming damages on productivity. I incorporate trade of goods and migration across regions and industries, to account for the ability of agents to adapt to this phenomenon, and non-homothetic preferences, to reproduce the reallocation of economic activity when income grows. To measure mobility frictions, I collect data from censuses and population surveys, and employ methodologies from the demographic literature to provide novel estimates of worldwide bilateral migration flows. To identify the non-linear effects of temperature on productivity, I exploit weather fluctuations in a long panel and find that agricultural productivity in the hottest countries declines by 6% when temperature rises 1ºC. The model, quantified for 6 sectors and 287 countries and subnational units, suggests that workers in agriculture face welfare losses three times larger than the average worker and that employment in this sector increases. Although hot regions might reduce the production of agricultural goods and import them from less affected locations, sectoral specialization is mainly driven by the shift in consumption expenditure towards the subsistence goods, as warming reduces global income.

Other Papers

With Esteban Rossi-Hansberg

Revised and Resubmitted at

The Review of Economic Studies

NBER Working Paper No. 28466

Abstract:  Global warming is a worldwide and protracted phenomenon with heterogeneous local economic effects. In order to evaluate the aggregate and local economic consequences of higher temperatures, we propose a dynamic economic assessment model of the world economy with high spatial resolution. Our model features a number of mechanisms through which individuals can adapt to global warming, including costly trade and migration, and local technological innovations and natality rates. We quantify the model at a 1º x 1º resolution and estimate damage functions that determine the impact of temperature changes on a region's fundamental productivity and amenities depending on local temperatures. Our baseline results show welfare losses from global warming as large as 20% in parts of Africa and Latin America but also high heterogeneity across locations, with northern regions in Siberia, Canada, and Alaska experiencing gains. We find that global warming will increase spatial inequality, since estimated welfare losses across locations are negatively correlated with current real income and welfare. There is large uncertainty about average welfare effects, but much less uncertainty about the spatial distribution of losses. Our quantification points to migration and, to a lesser extent, innovation as important adaptation mechanisms. We use the model to assess the impact of carbon taxes, abatement technologies, and clean energy subsidies. Carbon taxes delay consumption of fossil fuels and help flatten the temperature curve but are much more effective when an abatement technology is forthcoming.

With Esteban Rossi-Hansberg

NBER Working Paper No. 30027

Abstract:  We study local carbon policy to address the consequences of climate change. Standard analysis suggests that the social cost of carbon determines optimal carbon policy. We start by using the spatial integrated assessment model in Cruz and Rossi-Hansberg (2021) to measure the local social monetary cost of CO2 emissions: the Local Social Cost of Carbon (LSCC). Although the largest welfare costs from global warming are concentrated in the warmest parts of the developing world, adjusting for the local marginal utility of income implies that the LSCC peaks in warm and high-income regions like the southern parts of the U.S. and Europe, as well as Australia. We then proceed to study the effect of the actual carbon reduction pledges in the Paris Agreement and the progress they can make in implementing the expressed goal of keeping global temperature increases below 2ºC. We find that although the distribution of pledges is roughly in line with the LSCC, their magnitude is largely insufficient to achieve its goals. The required carbon taxes necessary to keep temperatures below 2ºC over the current century are an order of magnitude higher and involve large implicit inter-temporal transfers. Increasing the elasticity of substitution across energy sources is important to reduce the carbon taxes necessary to achieve warming goals.

Work in Progress

Optimal Environmental Policy to Mitigate
Global Warming

The Spatial, Industrial and Dynamic Economic Response to Climate Shocks

 

Teaching

Princeton University (Teaching Assistant)

Instituto Tecnológico Autónomo de México (Lecturer)

 
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Contact me

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José-Luis Cruz 

S.V. Ciriacy-Wantrup Postdoctoral Fellow

Department of Agricultural and Resource Economics

University of California at Berkeley

301 Giannini Hall, Berkeley, CA 94720