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How Do Energy Prices, and Labor and Environmental Regulations Affect Local Manufacturing Employment Dynamics? A Regression Discontinuity Approach

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  • Matthew E. Kahn
  • Erin T. Mansur

Abstract

Manufacturing industries differ with respect to their energy intensity, labor-to-capital ratio and their pollution intensity. Across the United States, there is significant variation in electricity prices and labor and environmental regulation. This paper uses a regression discontinuity approach to examine whether the basic logic of comparative advantage can explain the geographical clustering of U.S. manufacturing. Using a unified empirical framework, we document that energy-intensive industries concentrate in low electricity price counties, labor-intensive industries avoid pro-union counties, and pollution-intensive industries locate in counties featuring relatively lax Clean Air Act regulation. We use our estimates to predict the likely jobs impacts of regional carbon mitigation efforts.

Suggested Citation

  • Matthew E. Kahn & Erin T. Mansur, 2010. "How Do Energy Prices, and Labor and Environmental Regulations Affect Local Manufacturing Employment Dynamics? A Regression Discontinuity Approach," NBER Working Papers 16538, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16538
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    References listed on IDEAS

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    12. Steven Davis & Cheryl Grim & John Haltiwanger & Mary Streitwieser, 2007. "Electricity Pricing to U.S. Manufacturing Plants, 1963-2000," Working Papers 07-28, Center for Economic Studies, U.S. Census Bureau.
    13. Stephen P. Holland & Erin T. Mansur, 2008. "Is Real-Time Pricing Green? The Environmental Impacts of Electricity Demand Variance," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 550-561, August.
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    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Will AB32 Lead to Manufacturing Job Loss in California?
      by Matthew E. Kahn in The Reality-Based Community on 2013-01-20 00:53:27
    2. A Response to Fellow Climate Change Nerds
      by Matthew E. Kahn in Environmental and Urban Economics on 2010-12-29 03:18:00
    3. Understanding Rising Political Polarization on Climate Change
      by Matthew E. Kahn in Environmental and Urban Economics on 2011-05-07 21:53:00
    4. The WSJ on the Costs of State Level Carbon Cap & Trade
      by Matthew E. Kahn in Environmental and Urban Economics on 2011-06-03 19:51:00
    5. My OP-ED Piece about California's Anti-Carbon Legislation
      by Matthew Kahn in Environmental and Urban Economics on 2012-08-16 20:30:00
    6. IZA's New Environment and Employment Group
      by Matthew Kahn in Environmental and Urban Economics on 2013-04-23 22:33:00
    7. Mexico as a Lead Pollution Haven
      by Matthew E. Kahn in Legal Planet on 2013-02-09 22:05:09
    8. Unions and Economic Growth
      by Matthew Kahn in the reality-based community on 2011-02-28 21:20:26

    Citations

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    Cited by:

    1. Lang, Corey, 2015. "The dynamics of house price responsiveness and locational sorting: Evidence from air quality changes," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 71-82.
    2. Huse, Cristian, 2014. "Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy," MPRA Paper 48909, University Library of Munich, Germany.
    3. Abel Schumann, 2014. "Persistence of Population Shocks: Evidence from the Occupation of West Germany after World War II," American Economic Journal: Applied Economics, American Economic Association, vol. 6(3), pages 189-205, July.
    4. Joseph E. Aldy & William A. Pizer, 2015. "The Competitiveness Impacts of Climate Change Mitigation Policies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(4), pages 565-595.
    5. Mario Piacentini, 2012. "Rationale and policies for the green growth of cities and regional economies," International Economics and Economic Policy, Springer, vol. 9(2), pages 129-146, June.
    6. Kahn, Matthew E. & Mansur, Erin T., 2013. "Do local energy prices and regulation affect the geographic concentration of employment?," Journal of Public Economics, Elsevier, vol. 101(C), pages 105-114.
    7. Corey Lang, 2012. "The Dynamics of House Price Capitalization and Locational Sorting: Evidence from Air Quality Changes," Working Papers 12-22, Center for Economic Studies, U.S. Census Bureau.
    8. Wilson, Nathan E., 2012. "Uncertain regulatory timing and market dynamics," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 102-115.
    9. Zhang, Chuanchuan, 2012. "结婚年龄与婚姻的稳定性：来自断点回归的证据 [Age at marriage and marital stability: evidence from a regression discontinuity design]," MPRA Paper 38809, University Library of Munich, Germany.
    10. Jordan C. Stanley, 2018. "Labor market impacts from ozone nonattainment status: a regression discontinuity analysis," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(3), pages 527-546, July.
    11. Deschenes, Olivier, 2013. "Green Jobs," IZA Policy Papers 62, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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