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Do EPA Regulations Affect Labor Demand? Evidence from the Pulp and Paper Industry

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  • Ronald J. Shadbegian
  • Wayne B. Gray
  • Chumbei Wang
  • Merve Cebi
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    Abstract

    Many believe that environmental regulation must reduce employment, since regulations are expected to increase production costs, raising prices and reducing demand for output. A careful microeconomic analysis shows that this not guaranteed. Even if environmental regulation reduces output in the regulated industry, abating pollution could require additional labor (e.g. to monitor the abatement capital and meet EPA reporting requirements). Pollution abatement technologies could also be labor enhancing. In this paper we analyze how a particular EPA regulation, the “Cluster Rule” (CR) imposed on the pulp and paper industry in 2001, affected employment in that sector. Using establishment level data from the Census of Manufacturers and Annual Survey of Manufacturers at the U.S. Census Bureau from 1992-2007 we find evidence of small employment declines (on the order of 3%-7%), sometimes statistically significant, at a subset of the plants covered by the CR.

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    File URL: http://yosemite.epa.gov/ee/epa/eed.nsf/WPNumber/2013-03/$File/2013-03.PDF
    File Function: First version, 2013
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    Bibliographic Info

    Paper provided by National Center for Environmental Economics, U.S. Environmental Protection Agency in its series NCEE Working Paper Series with number 201303.

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    Length: 42 pages
    Date of creation: Aug 2013
    Date of revision: Aug 2013
    Handle: RePEc:nev:wpaper:wp201303

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    Keywords: Cluster Rule; regulatory costs; multimedia regulation; employment effects;

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    1. Morgenstern, Richard D. & Pizer, William A. & Shih, Jhih-Shyang, 2002. "Jobs Versus the Environment: An Industry-Level Perspective," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 412-436, May.
    2. Berman, Eli & Bui, Linda T. M., 2001. "Environmental regulation and labor demand: evidence from the South Coast Air Basin," Journal of Public Economics, Elsevier, vol. 79(2), pages 265-295, February.
    3. Ronald J. Shadbegian and Wayne B. Gray, 2005. "Assessing Multi-Dimensional Performance: Environmental and Economic Outcomes," NCEE Working Paper Series 200505, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jun 2005.
    4. Eli Berman & Linda T.M. Bui, 1998. "Environmental Regulation and Productivity: Evidence from Oil Refineries," Papers 0091, Boston University - Industry Studies Programme.
    5. Ronald Shadbegian & Wayne Gray, 2003. "Pollution Abatement Expenditures and Plant-Level Productivity: A Production Function Approach," Working Papers 03-16, Center for Economic Studies, U.S. Census Bureau.
    6. Ron S Jarmin & Javier Miranda, 2002. "The Longitudinal Business Database," Working Papers 02-17, Center for Economic Studies, U.S. Census Bureau.
    7. Laplante, Benoit & Rilstone, Paul, 1996. "Environmental Inspections and Emissions of the Pulp and Paper Industry in Quebec," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 19-36, July.
    8. Wayne B. Gray & Ronald J. Shadbegian, 2001. "Plant Vintage, Technology, and Environmental Regulation," NBER Working Papers 8480, National Bureau of Economic Research, Inc.
    9. 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.
    10. Boyd, Gale A. & McClelland, John D., 1999. "The Impact of Environmental Constraints on Productivity Improvement in Integrated Paper Plants," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 121-142, September.
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