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The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 & 1977 Clean Air Act Amendments and the Census of Manufactures

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  • Michael Greenstone

Abstract

This paper estimates the effects of environmental regulations on industrial activity. The analysis is conducted with the most comprehensive data available on both regulations from the Clean Air Act Amendments' division of counties into pollutant-specific nonattainment and attainment categories and manufacturing activity from the 1.75 million plant observations that comprise the 1967-87 Censuses of Manufactures. Emitters of the controlled pollutants are subject to greater regulatory oversight in nonattainment counties. I find that in the first 15 years after the Amendments became law (1972- 1987), nonattainment counties (relative to attainment ones) lost approximately 590,000 jobs, $37 billion in capital stock, and $75 billion (1987$) of output in pollution intensive industries. These estimates are derived from a statistical model for plant-level growth that controls for plant fixed effects, unrestricted industry shocks, and unrestricted county shocks. Importantly these findings are robust across many specifications, and the effects are apparent across a wide range of polluting industries. Although the decline in manufacturing activity was substantial in nonattainment counties, it was modest compared to the size of the entire manufacturing sector.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8484.

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Date of creation: Sep 2001
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Publication status: published as Greenstone, Michael. "The Impacts Of Environmental Regulations On Industrial Activity: Evidence From The 1970 And 1977 Clean Air Act Amendments And The Census Of Manufactures," Journal of Political Economy, 2002, v110(6,Dec), 1175-1219.
Handle: RePEc:nbr:nberwo:8484

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  1. Randy A Becker & Vernon Henderson, 1999. "Costs of Air Quality Regulation," Working Papers 99-9, Center for Economic Studies, U.S. Census Bureau.
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  6. Carlo Carraro & Gilbert E. Metcalf, 2000. "Behavioral and Distributional Effects of Environmental Policy Introduction," NBER Working Papers 7648, National Bureau of Economic Research, Inc.
  7. Becker, Randy A., 2005. "Air pollution abatement costs under the Clean Air Act: evidence from the PACE survey," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 144-169, July.
  8. Steve J. Davis & John Haltiwanger, 1991. "Gross Job Creation, Gross Job Destruction and Employment Reallocation," NBER Working Papers 3728, National Bureau of Economic Research, Inc.
  9. Kenneth Y. Chay & Michael Greenstone, 2003. "The Impact Of Air Pollution On Infant Mortality: Evidence From Geographic Variation In Pollution Shocks Induced By A Recession," The Quarterly Journal of Economics, MIT Press, vol. 118(3), pages 1121-1167, August.
  10. Bovenberg, A.L. & Ploeg, F. van der, 1993. "Optimal taxation, public goods and environmental policy with involuntary unemployment," Discussion Paper 1993-77, Tilburg University, Center for Economic Research.
  11. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, December.
  12. 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.
  13. 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.
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  15. Randy Becker & Vernon Henderson, 2000. "Effects of Air Quality Regulations on Polluting Industries," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 379-421, April.
  16. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
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Cited by:
  1. Levinson, Arik, 2003. "Environmental Regulatory Competition: A Status Report and Some New Evidence," National Tax Journal, National Tax Association, vol. 56(1), pages 91-106, March.
  2. 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.
  3. Arik Levinson and M. Scott Taylor, 2004. "Unmasking the Pollution Haven Hypothesis," Working Papers gueconwpa~04-04-04, Georgetown University, Department of Economics.
  4. Davide Antonioli & Massimiliano Mazzanti, 2009. "Techno-organisational strategies, environmental innovations and economic performances. Micro-evidence from an SME-based industrial district," Journal of Innovation Economics, De Boeck Université, vol. 0(1), pages 145-168.
  5. Sahu, Santosh Kumar & Narayanan, K., 2013. "Exports and Participation in Clean Development Mechanism [CDM] in Technology Intensive Industries in India," MPRA Paper 50745, University Library of Munich, Germany.
  6. Baomin Dong & Jiong Gong & Xin Zhao, 2012. "FDI and environmental regulation: pollution haven or a race to the top?," Journal of Regulatory Economics, Springer, vol. 41(2), pages 216-237, April.

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