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Pollution Abatement Costs, Regulation, and Plant-Level Productivity

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Author Info
Wayne B. Gray
Ronald J. Shadbegian

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Abstract

We analyze the connection between productivity, pollution abatement expenditures, and other measures of environmental regulation for plants in three industries (paper, oil, and steel). We examine data from 1979 to 1990, considering both total factor productivity levels and growth rates. Plants with higher abatement cost levels have significantly lower productivity levels. The magnitude of the impact is somewhat larger than expected: $1 greater abatement costs appears to be associated with the equivalent of $1.74 in lower productivity for paper mills, $1.35 for oil refineries, and $3.28 for steel mills. However, these results apply only to variation across plants in productivity levels. Estimates looking at productivity variation within plants over time, or estimates using productivity growth rates show a smaller (and insignificant) relationship between abatement costs and productivity. Other measures of environmental regulation faced by the plants (compliance status, enforcement activity, and emissions) are not significantly related to productivity.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4994.

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Date of creation: Jan 1995
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Handle: RePEc:nbr:nberwo:4994

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Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

References listed on IDEAS
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  1. Robert H Mcguckin & George A Pascoe, 1988. "The Longitudinal Research Database (LRD): Status And Research Possibilities," Working Papers 88-2, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  2. Barbera, Anthony J & McConnell, Virginia D, 1986. "Effects of Pollution Control on Industry Productivity: A Factor Demand Approach," Journal of Industrial Economics, Blackwell Publishing, vol. 35(2), pages 161-72, December. [Downloadable!] (restricted)
  3. Kim B. Clark, 1980. "The impact of unionization on productivity: A case study," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 33(4), pages 451-469, July.
  4. 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. [Downloadable!] (restricted)
    Other versions:
  5. 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. [Downloadable!] (restricted)
  6. Sang V Nguyen & Edward C Kokkelenberg, 1991. "Measuring Total Factor Productivity, Technical Change And The Rate Of Returns To Research And Development," Working Papers 91-3, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  7. 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. [Downloadable!] (restricted)
  8. 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. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. William A Pizer & Jhih-Shyang Shih & Richard D Morgenstern, 1997. "Are We Overstating the Economic Costs of Environmental Protection?," Working Papers 97-12, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  2. Carl Pasurka, 2001. "Technical Change and Measuring Pollution Abatement Costs: An Activity Analysis Framework," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(1), pages 61-85, January. [Downloadable!] (restricted)
  3. Wayne B Gray & Ronald J Shadbegian, 1997. "Environmental Regulation, Investment Timing, and Technology Choice," Working Papers 97-9, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  4. Randy Becker, 2001. "Air Pollution Abatement Costs Under the Clean Air Act: Evidence from the PACE Survey," Working Papers 01-12, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
    Other versions:
  5. Pizer, William & Morgenstern, Richard & Shih, Jhih-Shyang, 1998. "The Cost of Environmental Protection," Discussion Papers dp-98-36, Resources For the Future. [Downloadable!]
    Other versions:
  6. repec:fth:prinin:408 is not listed on IDEAS
  7. Roberto Burguet & Jaime Sempere, . "North-South Environmental Debate: Strategic Price Distortions And Capital Flows," UFAE and IAE Working Papers 442.99, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
  8. Michael Ollinger & Jorge Fernandez-Cornejo, 1995. "Innovation and Regulation in the Pesticide Industry," Working Papers 95-14, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  9. Dwyer, Douglas W., 1997. "Are Fixed Effects Fixed?," Working Papers 97-35, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  10. Li, Zhe, 2008. "Productivity Dispersion across Plants, Emission Abatement, and Environmental Policy," MPRA Paper 9564, University Library of Munich, Germany. [Downloadable!]
  11. M.N. Murthy & Surender Kumar, 2001. "Win-win opportunities & environmental regulation: Testing of porter hypothesis for Indian manufacturing industries," Institute of Economic Growth, Delhi Discussion Papers 25, Institute of Economic Growth, Delhi, India. [Downloadable!]
  12. Hua Wang & Ming Chen, 1999. "How the Chinese system of charges and subsidies affects pollution control efforts by China's top industrial polluters," Policy Research Working Paper Series 2198, The World Bank. [Downloadable!]
  13. Michael Greenstone, 1998. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufacturers," Working Papers 787, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
    Other versions:
  14. Ronald Shadbegian & Randy Becker, 2004. "A Change of PACE: Comparing the 1994 and 1999 Pollution Abatement Costs and Expenditures Surveys," Working Papers 04-09, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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