Input Sourcing under Climate Risk: Evidence from U.S. Manufacturing Firms

Blaum, Esposito, and Heise study how supply chain risk — specifically, the risk of unexpected shipping delays caused by ocean weather conditions — affects U.S. manufacturing firms’ import sourcing decisions. The paper asks three related questions: Do weather-induced shipping delays harm firm performance? Do firms adapt their sourcing strategies ex ante in response to shipping time risk? And what are the aggregate welfare costs of heightened supply chain risk from climate change, geopolitical tensions, and port congestion?

Wage growth and labor market tightness

Research Question. Which measures of labor market tightness best predict nominal wage inflation, and do standard measures such as the unemployment rate and the vacancy-to-unemployment ratio capture the relevant slack? The paper also asks whether transitory productivity shocks affect wage growth, and whether the wage Phillips curve is nonlinear.

Motivation and Model. Standard measures of labor market tightness have had mixed performance since the COVID-19 pandemic: unemployment quickly returned to pre-pandemic levels while wage growth remained persistently elevated, motivating a search for superior indicators. The paper builds on the theoretical framework of Bloesch, Lee, and Weber (2024), a tractable New Keynesian DSGE model in which firms set wages and workers search on the job. In this model, labor market tightness is well-summarized by either (a) the quits rate or (b) vacancies per effective searcher (V/ES), where effective searchers include both employed and unemployed job seekers. Unemployment enters the model’s wage Phillips curve but with a coefficient close to zero, because changes in the unemployment share do not substantially shift the composition of searchers in a way that alters firms’ wage incentives. Transitory TFP shocks have theoretically ambiguous effects on nominal wage growth because the outcome depends on the central bank’s policy response.

Sebastian Heise | Macro Paper Warehouse

Input Sourcing under Climate Risk: Evidence from U.S. Manufacturing Firms

Wage growth and labor market tightness