Environmental Regulation And Manufacturing Productivity At The Plant Level
AbstractThis paper presents results for an analysis of plant-level data from three manufacturing industries (paper, oil, and steel). We combine productivity data from the Longitudinal Research Database ( LRD ) with pollution abatement expenditures from the Census Bureau's Pollution Abatement Cost and Expenditures (PACE) survey, as well as regulatory measures taken from datasets maintained by the Environmental Protection Agency. We use data from 1979 to 1985, considering both labor and total factor productivity, both levels and growth rates, and both annual measures and averages over the period. We find a strong connection between regulation and productivity when regulation is measured by compliance costs. More regulated plants have significantly lower productivity levels and slower productivity growth rates than less regulated plants. The magnitude of the impacts are larger than expected: a $1 increase in compliance costs appears to reduce TFP by the equivalent of $3 to $4. Thus, commonly used methods of calculating the impact of regulation on productivity are substantially underestimated. These results are generally consistent across industries and for different estimation methods. Our other measures of regulation (compliance status, enforcement activity, and emissions) show much less consistent results. Higher enforcement, lower compliance, and higher emissions are generally associated with lower productivity levels and slower productivity growth, but the coefficients are rarely significant.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 93-6.
Date of creation: Mar 1993
Date of revision:
CES; economic; research; micro; data; microdata; chief; economist;
Other versions of this item:
- Wayne B. Gray & Ronald J. Shadbegian, 1993. "Environmental Regulation and Manufacturing Productivity at the Plant Level," NBER Working Papers 4321, National Bureau of Economic Research, Inc.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gray, Wayne B, 1987. "The Cost of Regulation: OSHA, EPA and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 77(5), pages 998-1006, December.
- J. R. Norsworthy & Michael J. Harper & Kent Kunze, 1979. "The Slowdown in Productivity Growth: Analysis of Some Contributing factors," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(2), pages 387-422.
- Christainsen, Gregory B & Haveman, Robert H, 1981. "Public Regulations and the Slowdown in Productivity Growth," American Economic Review, American Economic Association, vol. 71(2), pages 320-25, May.
- Klaus Conrad & Catherine J. Morrison, 1985. "The Impact of Pollution Abatement Investment on Productivity Change: AnEmpirical Comparison of the U.S., Germany, and Canada," NBER Working Papers 1763, National Bureau of Economic Research, Inc.
- Kim B. Clark, 1980. "The impact of unionization on productivity: A case study," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 33(4), pages 451-469, July.
- Barbera, Anthony J & McConnell, Virginia D, 1986. "Effects of Pollution Control on Industry Productivity: A Factor Demand Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 35(2), pages 161-72, December.
- Viscusi, W Kip, 1983. "Frameworks for Analyzing the Effects of Risk and Environmental Regulations on Productivity," American Economic Review, American Economic Association, vol. 73(4), pages 793-801, September.
- Mary E. Deily & Wayne B. Gray, 1989.
"Enforcement of pollution regulations in a declining industry,"
8912, Federal Reserve Bank of Cleveland.
- Deily, Mary E. & Gray, Wayne B., 1991. "Enforcement of pollution regulations in a declining industry," Journal of Environmental Economics and Management, Elsevier, vol. 21(3), pages 260-274, November.
- Gollop, Frank M & Roberts, Mark J, 1983. "Environmental Regulations and Productivity Growth: The Case of Fossil-Fueled Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 654-74, August.
- Satish Joshi & Ranjani Krishnan & Lester Lave, 2002. "Estimating the Hidden Costs of Environmental Regulation," Working Papers 02-10, Center for Economic Studies, U.S. Census Bureau.
- Glen Dowell & Stuart Hart & Bernard Yeung, 1999. "Do Corporate Global Environmental Standards in Emerging Markets Create Or Destroy Market Value," William Davidson Institute Working Papers Series 259, William Davidson Institute at the University of Michigan.
- Emilio Galdeano Gómez, 2002. "Competitividad de las cooperativas hortofrutícolas: análisis del impacto económico de las acciones de calidad y medioambientales en las OPFH andaluzas," CIRIEC-España, revista de economía pública, social y cooperativa, CIRIEC-España, issue 41, pages 53-83, August.
- Adam B. Jaffe & Karen Palmer, 1996.
"Environmental Regulation and Innovation: A Panel Data Study,"
NBER Working Papers
5545, National Bureau of Economic Research, Inc.
- Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
- Fabio Iraldo & Francesco Testa & Vlasis Oikonomou & Michela Melis & Marco Frey & Eise Spijker, 2009. "A literature review on the links between environmental regulation and competitiveness," Working Papers 200904, Scuola Superiore Sant'Anna of Pisa, Istituto di Management.
- Mary L Streitwieser, 1994. "Cross Sectional Variation In Toxic Waste Releases From The U.S. Chemical Industry," Working Papers 94-8, Center for Economic Studies, U.S. Census Bureau.
- Gomez, Emilio Galdeano & Lorente, Jose Cespedes & Rodriguez, Manuel Rodriguez, 2002. "Environmental and Quality Improvement Practices: Their Analysis as Components of the Value Added in Horticultural Firms," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24870, European Association of Agricultural Economists.
- Jenkins, Rhys, 1998. "Environmental Regulation and International Competitiveness: A Review of Literature and Some European Evidence," UNU-INTECH Discussion Paper Series 01, United Nations University - INTECH.
- Jenkins, Rhys, 1998. "Environmental Regulation and International Competitiveness: A Review of Literature and Some European Evidence," Discussion Papers 01, United Nations University, Institute for New Technologies.
- Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
- Chilton, Kenneth W., 2000. "Reengineering U.S. environmental protection," Business Horizons, Elsevier, vol. 43(2), pages 7-16.
- Bonifant, Benjamin C. & Arnold, Matthew B. & Long, Frederick J., 1995. "Gaining competitive advantage through environmental investments," Business Horizons, Elsevier, vol. 38(4), pages 37-47.
- Eli Berman & Linda T. Bui, 1997. "band Labor Demand: Evidence from the South Coast Air Basin," NBER Working Papers 6299, National Bureau of Economic Research, Inc.
- Jiao, Yawen, 2010. "Stakeholder welfare and firm value," Journal of Banking & Finance, Elsevier, vol. 34(10), pages 2549-2561, October.
- Gale Boyd & George Tolley & Joseph Pang, 2002. "Plant Level Productivity, Efficiency, and Environmental Performance of the Container Glass Industry," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(1), pages 29-43, September.
- Douglas W Dwyer, 1995. "Whittling Away At Productivity Dispersion," Working Papers 95-5, Center for Economic Studies, U.S. Census Bureau.
- repec:ros:wpaper:29 is not listed on IDEAS
- Erik Biørn & Rolf Golombek* & Arvid Raknerud, 1998. "Environmental Regulations and Plant Exit," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(1), pages 35-59, January.
- David Pearce & Charles Palmer, 2001. "Public and private spending for environmental protection: a cross-country policy analysis," Fiscal Studies, Institute for Fiscal Studies, vol. 22(4), pages 403-456, December.
- Rauscher, Michael, 2001. "International Trade, Foreign Investment, and the Enivronment," Thuenen-Series of Applied Economic Theory 29, University of Rostock, Institute of Economics.
- Vernon Henderson, 1995.
"Effects of Air Quality Regulation,"
NBER Working Papers
5118, National Bureau of Economic Research, Inc.
- Massimiliano Mazzanti & Giulio Cainelli & Roberto Zoboli, 2008. "The Relationship Between Environmental Efficiency and Manufacturing Firm’s Growth," Working Papers 2008.99, Fondazione Eni Enrico Mattei.
- Levinson, Arik, 1999. "Grandfather regulations, new source bias, and state air toxics regulations," Ecological Economics, Elsevier, vol. 28(2), pages 299-311, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fariha Kamal).
If references are entirely missing, you can add them using this form.