Observed Teleconnections in Northern Winter: Subseasonal Evolution and Tropical Linkages

Teleconnections refer to the climate variability links between non-contiguous geographic regions, and tend to be associated with variability in both space and time of the climate’s semi-permanent circulation features. Teleconnections are well-developed in Northern winter, when they influence subseasonal-to-seasonal climate variability, notably, in surface temperature and precipitation. This work is comprised of four independent studies that improve understanding of tropical-extratropical teleconnections and their surface climate responses, subseasonal teleconnection evolution, and the utility of teleconnections in attribution of extreme climate events. After an introduction to teleconnection analysis as well as the major teleconnection patterns and associated climatic footprints manifest during Northern winter, the lagged impact of the Madden-Julian Oscillation (MJO) on subseasonal climate variability is presented. It is found that monitoring of MJO-related velocity potential anomalies is sufficient to predict MJO impacts. These impacts include, for example, the development of significant positive temperature anomalies over the eastern United States one to three weeks following an anomalous convective dipole with enhanced (suppressed) convection centered over the Indian Ocean (western Pacific). Subseasonal teleconnection evolution is assessed with respect to the Pacific-North America (PNA) pattern and the North Atlantic Oscillation (NAO). This evolution is analyzed both in the presence and absence of MJO-related circulation anomalies. It is found that removal of the MJO results only in small shifts in the centers of action of the NAO and PNA, and that in either case there is a small but significant lag in which the NAO leads a PNA pattern of opposite phase. Barotropic vorticity analysis suggests that this relationship may result in part from excitation of Rossby waves by the NAO in the Asian waveguide. An attempt is made to elegantly differentiate between the MJO extratropical response and patterns of variability more internal to the extratropics. Analysis of upper-level streamfunction anomalies is successful in this regard, and it is suggested that this is the preferred method for the real time monitoring of tropical-extratropical teleconnections. The extreme 2013-2014 North American winter is reconstructed using teleconnection analysis, and it is found that the North Pacific Oscillation-West Pacific (NPO/WP) pattern was the leading contributor to climate anomalies over much of North America. Such attribution is cautionary given the propensity to implicate the tropics for all midlatitude climate anomalies based on the El Niño-Southern Oscillation (ENSO) paradigm. A recent hypothesis of such tropical influence is presented and challenged.

Trade Shocks and Local Labor Markets' Linkages: Theory and Evidence

In the past few years, there has been a concern among economists and policy makers that increased openness to international trade affects some regions in a country more than others. Recent research has found that local labor markets more exposed to import competition through their initial employment composition experience worse outcomes in several dimensions such as, employment, wages, and poverty. Although there is evidence that regions within a country exhibit variation in the intensity with which they trade with each other and with other countries, trade linkages have been ignored in empirical analyses of the regional effects of trade, which focus on differences in employment composition. In this dissertation, I investigate how local labor markets' trade linkages shape the response of wages to international trade shocks. In the second chapter, I lay out a standard multi-sector general equilibrium model of trade, where domestic regions trade with each other and with the rest of the world. Using this benchmark, I decompose a region's wage change resulting from a national import cost shock into a direct effect on prices, holding other endogenous variables constant, and a series of general equilibrium effects. I argue the direct effect provides a natural measure of exposure to import competition within the model since it summarizes the effect of the shock on a region's wage as a function of initial conditions given by its trade linkages. I call my proposed measure linkage exposure while I refer to the measures used in previous studies as employment exposure. My theoretical analysis also shows that the assumptions previous studies make on trade linkages are not consistent with the standard trade model. In the third chapter, I calibrate the model to the Brazilian economy in 1991--at the beginning of a period of trade liberalization--to perform a series of experiments. In each of them, I reduce the Brazilian import cost by 1 percent in a single sector and I calculate how much of the cross-regional variation in counterfactual wage changes is explained by exposure measures. Over this set of experiments, employment exposure explains, for the median sector, 2 percent of the variation in counterfactual wage changes while linkage exposure explains 44 percent. In addition, I propose an estimation strategy that incorporates trade linkages in the analysis of the effects of trade on observed wages. In the model, changes in wages are completely determined by changes in market access, an endogenous variable that summarizes the real demand faced by a region. I show that a linkage measure of exposure is a valid instrument for changes in market access within Brazil. By using observed wage changes in Brazil between 1991-2000, my estimates imply that a region at the 25th percentile of the change in domestic market access induced by trade liberalization, experiences a 0.6 log points larger wage decline (or smaller wage increase) than a region at the 75th percentile. The estimates from a regression of wages changes on exposure imply that a region at the 25th percentile of exposure experiences a 3 log points larger wage decline (or smaller wage increase) than a region at the 75th percentile. I conclude that estimates based on exposure overstate the negative impact of trade liberalization on wages in Brazil. In the fourth chapter, I extend the standard model to allow for two types of workers according to their education levels: skilled and unskilled. I show that there is substantial variation across Brazilian regions in the skill premium. I use the exogenous variation provided by tariff changes to estimate the impact of market access on the skill premium. I find that decreased domestic market access resulting from trade liberalization resulted in a higher skill premium. I propose a mechanism to explain this result: that the manufacturing sector is relatively more intensive in unskilled labor and I show empirical evidence that supports this hypothesis.

Industry Linkages and Audit Firms' Industry Portfolio Choice: Evidence from Product Language

Audit firms are organized along industry lines and industry specialization is a prominent feature of the audit market. Yet, we know little about how audit firms make their industry portfolio decisions, i.e., how audit firms decide which set of industries to specialize in. In this study, I examine how the linkages between industries in the product space affect audit firms’ industry portfolio choice. Using text-based product space measures to capture these industry linkages, I find that both Big 4 and small audit firms tend to specialize in industry-pairs that 1) are close to each other in the product space (i.e., have more similar product language) and 2) have a greater number of “between-industries” in the product space (i.e., have a greater number of industries with product language that is similar to both industries in the pair). Consistent with the basic tradeoff between specialization and coordination, these results suggest that specializing in industries that have more similar product language and more linkages to other industries in the product space allow audit firms greater flexibility to transfer industry-specific expertise across industries as well as greater mobility in the product space, hence enhancing its competitive advantage. Additional analysis using the collapse of Arthur Andersen as an exogenous supply shock in the audit market finds consistent results. Taken together, the findings suggest that industry linkages in the product space play an important role in shaping the audit market structure.