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Jobs Versus the Environment: An Industry-Level Perspective

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  • Morgenstern, Richard D.
  • Pizer, William A.
  • Shih, Jhih-Shyang

Abstract

The possibility that workers could be adversely affected by environmental policies imposed on heavily regulated industries has led to claims of a "jobs versus the environment" trade-off by both business and labor leaders. The present research examines this claim at the industry level for four heavily polluting industries: pulp and paper mills, plastic manufacturers, petroleum refiners, and iron and steel mills. By focusing on labor effects across an entire industry, we construct a measure relevant to the concerns of key stakeholders, such as labor unions and trade groups. We decompose the link between environmental regulation and employment into three distinct components: factor shifts to more or less labor intensity, changes in total expenditures, and changes in the quantity of output demanded. We use detailed plant-level data to estimate the key parameters describing factor shifts and changes in total expenditures. We then use aggregate time-series data on industry supply shocks and output responses to estimate the demand effect. We find that increased environmental spending generally does not cause a significant change in industry-level employment. Our average across all four industries is a net gain of 1.5 jobs per $1 million in additional environmental spending, with a standard error of 2.2 jobs—an insignificant effect. In the plastics and petroleum sectors, however, there are small but significantly positive effects: 6.9 and 2.2 jobs, respectively, per $1 million in additional expenditures. These effects can be linked to favorable factor shifts—environmental spending is more labor intensive than ordinary production—and relatively inelastic estimated demand.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 43 (2002)
Issue (Month): 3 (May)
Pages: 412-436

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Handle: RePEc:eee:jeeman:v:43:y:2002:i:3:p:412-436

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Web page: http://www.elsevier.com/locate/inca/622870

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References

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Citations

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Cited by:
  1. Ronald J. Shadbegian & Wayne B. Gray & Chumbei Wang & Merve Cebi, 2013. "Do EPA Regulations Affect Labor Demand? Evidence from the Pulp and Paper Industry," NCEE Working Paper Series 201303, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Aug 2013.
  2. Aldy, Joseph Edgar & Pizer, William, 2011. "The Competitiveness Impacts of Climate Change Mitigation Policies," Scholarly Articles 5688779, Harvard Kennedy School of Government.
  3. Kneller, Richard & Manderson, Edward, 2012. "Environmental regulations and innovation activity in UK manufacturing industries," Resource and Energy Economics, Elsevier, vol. 34(2), pages 211-235.
  4. Kim, Kijin, 2013. "The Effects of the Clean Air Act on Local Industrial Wages," 6th Annual CRAE, April 5-6, 2013, Columbus, Ohio 147489, Midwest Graduate Student Conference on Regional and Applied Economics (CRAE), The Ohio State University, Department of Agricultural, Environmental and Development Economics.
  5. Sen, Anindita, 2012. "Eco-Labelling and the Labour Market," MPRA Paper 49169, University Library of Munich, Germany.
  6. Randy A. Becker & Ronald J. Shadbegian & Carl Pasurka, 2013. "Do Environmental Regulations Disproportionately Affect Small Businesses? Evidence from the Pollution Abatement Costs and Expenditures Survey," NCEE Working Paper Series 201206, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Aug 2013.
  7. Timothy J. Bartik, 2013. "Social Costs of Jobs Lost Due to Environmental Regulations," Upjohn Working Papers and Journal Articles 13-193, W.E. Upjohn Institute for Employment Research.
  8. Lynn Mainwaring & Richard Jones & David Blackaby, 2006. "Devolution, sustainability and GDP convergence: Is the Welsh agenda achievable?," Regional Studies, Taylor & Francis Journals, vol. 40(6), pages 679-689.
  9. Matthew A Cole & Robert J R Elliott & Joanne K Lindley, 2009. "Dirty Money: Is there a Wage Premium for Working in a Pollution Intensive Industry," Discussion Papers 09-13, Department of Economics, University of Birmingham.
  10. Pizer, William A. & Kopp, Raymond, 2005. "Calculating the Costs of Environmental Regulation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 3, chapter 25, pages 1307-1351 Elsevier.
  11. repec:cen:wpaper:12-25 is not listed on IDEAS
  12. Marcus Wagner, 2004. "The Porter Hypothesis Revisited: A Literature Review of Theoretical Models and Empirical Tests," Public Economics 0407014, EconWPA.

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