Research

We study how climate transition risk shapes corporate bankruptcy. We construct a novel dataset linking U.S. bankruptcies to environmental violations, facility-level emissions, and satellite-derived vegetation health. We find that firms facing higher transition risk are more prone to distress and bankruptcy. By exploiting quasi-random judge assignment, we find that judges who are lenient toward carbon-intensive firms are more likely to approve reorganizations and grant greater debt relief. After bankruptcy, these firms increase emissions and degrade local vegetation, revealing a trade-off between financial restructuring and environmental quality. 

We provide systematic evidence on the environmental consequences of corporate mergers. We model two competing channels: a market power channel that contracts output and a green technology channel that internalizes the returns to abatement. We test their distinct predictions by linking European mergers to facility-level pollution, firm financials, and patent records, and applying a Sun–Abraham staggered difference-in-differences design, exploiting the differential timing of merger completion across treated firms and using canceled deals as a quasi-experimental control. We show that completed mergers reduce facility-level CO2 emissions and emission intensity (CO2 per unit of revenue), while turnover and employment are unchanged. The reductions are concentrated in high-carbon intensity firms that also raise green and process patenting, consistent with the green technology channel. In carbon-priced industries, mergers thus reduce emissions through efficiency rather than output contraction. The channel is within-facility decarbonization and faster diffusion of cleaner production technology, not system-wide CO2 abatement.

What is the impact of energy price shocks on jobs? This paper examines how an increase in energy prices affects employment using the 2022 energy price crisis as a natural setting. While interesting in its own right it is also indicative of the employment effects of further carbon pricing which - like the 2022 fuel price shock - lead to an increase of carbon intensive fossil fuels such as oil and gas. While the sharp price increase of 2022 induced by the Russian attack on Ukraine was largely uniform across firms, we derive its impact by examining the differential employment response of firms with varying cross price elasticities between energy and employment. Thus we use a shift-share design where the energy price shock becomes the shift and cross price elasticities are the shares. Using the energy crisis of 2022 as a natural setting and detailed administrative UK firm-level data, we exploit variation in firms’ energy dependence by combining two measures of exposure: cross price elasticities between labor and energy, and energy cost shares. We estimate the heterogeneous impacts of rising energy costs on firms’ employment decisions. Our results show that higher energy prices led to modest job losses, with less than one percent of jobs in our sample lost over 2022 and 2023 due to increased energy costs. However, the impact was far from uniform. The contraction in employment is concentrated in energy intensive sectors such as Electricity and Gas, Water and Waste, and Transportation, and is particularly evident in rural and peripheral regions where labor markets are less flexible and alternative job opportunities are limited. We also find that mid-sized firms bear a disproportionate share of the employment adjustment compared to both small and very large firms. These findings show how energy price volatility can generate uneven effects across sectors, regions, and firm sizes, highlighting the importance of targeted policy responses such as energy price stabilisation and support for workforce mobility to help reduce adverse labor market impacts during periods of energy price shocks.