As multiple regions in the global south urbanize and transform, their social-environmental challenges also reshape. Climate change and ecological degradation intertwine with these processes in ways that have an uneven impact on people and firms with various degrees of vulnerability. In this dissertation, I look at such issues through the lens of sustainable development, with a regional emphasis on Mexico. Standard economic analyses of environmental policy focus on either reducing pollution externalities through mitigation or reducing the harms from exposure by encouraging adaptation. In practice, these issues are both critical, particularly when looking at the health effects of local air pollutants, which can be acute, and policymakers often pair information provision with short and long-run mitigation actions. In Chapter 1, I explore whether, in the context of the Mexico City air quality alert program, information policy is more effective when paired with mitigation. I find that the policy did not improve air quality or health outcomes until the mitigation component, which limited transport emissions, was introduced.
I also use sensor-level traffic data, geo-tagged accident reports, and search data as a measure of awareness of the policy to unveil the mechanisms through which considerable short-run improvements in air quality and health are achieved after issuing an alert. I find that the alert reduces car usage even before the driving restrictions enter into place, suggesting that, due to an increased awareness of pollution, people reduce their trips. Chapter 2 studies the effects of regional exposure to extreme temperatures on credit delinquency rates for firms in Mexico. Our exposure variable is defined as the number of days in a quarter that minimum and maximum temperature are below 3°C and above 36°C, respectively, which correspond to the bottom 5 percent and top 5 percent of daily minimum and maximum temperature distribution in the country. We find that extreme temperatures increase delinquency. This effect is mostly driven by extreme heat, and it is concentrated on agricultural firms, but there is also an effect on non-agriculture firms.
The impact on non-agricultural firms seems to be driven by general equilibrium effects in rural areas. Chapter 3, provides the first estimation of child penalties in the Mexican labor market. Using an event study approach and an instrumental variable as a robustness check, we estimate the impact of children on employment and wages, unpaid labor, and transitions between informal and formal sectors. We are the first to show that a child’s arrival significantly affects mothers’ paid and unpaid work, and it impacts members of the extended family unevenly, reinforcing traditional gender roles. While low- and middle-income women account for most of the effect of childbirth on wages, all mothers increase time spent on unpaid work.
