Social Costs of Jobs Lost Due to Environmental Regulations
AbstractThis paper estimates the social costs of job loss due to environmental regulation. Per job lost, potential social costs of job loss are high, plausibly over $100,000 in present value costs (2012 dollars) per permanently lost job. However, these social costs will typically be far less than the earnings associated with lost jobs, because labor markets and workers adjust, increased leisure has some value, and employers benefit from wage reductions. A plausible range for social costs is 8 - 32 percent of the associated earnings of the lost jobs. Social costs will be higher for older workers, high-wage jobs, and in high unemployment conditions. Under plausible estimates of job loss for most environmental regulations, the social costs of job loss will typically be less than 10 percent of other measured social costs of regulations. Therefore, adding in job loss is unlikely to tip many regulatory benefit-cost analyses.
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Bibliographic InfoPaper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 13-193.
Date of creation: Mar 2013
Date of revision:
Benefit cost analysis; worker displacement; environmental regulation; social cost of labor;
Find related papers by JEL classification:
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-04-13 (Agricultural Economics)
- NEP-ALL-2013-04-13 (All new papers)
- NEP-ENV-2013-04-13 (Environmental Economics)
- NEP-RES-2013-04-13 (Resource Economics)
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