IDEAS home Printed from https://ideas.repec.org/a/eee/jeeman/v81y2017icp209-226.html
   My bibliography  Save this article

Environmental policies and productivity growth: Evidence across industries and firms

Author

Listed:
  • Albrizio, Silvia
  • Kozluk, Tomasz
  • Zipperer, Vera

Abstract

This paper investigates the impact of changes in environmental policy stringency on industry- and firm-level productivity growth in a panel of OECD countries. To test the strong version of the Porter Hypothesis (PH), we extend a neo-Schumpeterian productivity model to allow for effects of environmental policies. We use a new environmental policy stringency (EPS) index and let the effect of countries׳ environmental policies vary with the pollution intensity of the industry and with the countries’ and firms’ technological advancement. A tightening of environmental policy is associated with a short-term increase in industry-level productivity growth in the most technologically-advanced countries. This effect diminishes with the distance to the global productivity frontier, eventually becoming insignificant. For the average firm, no evidence of PH is found. However, the most productive firms see a temporary boost in productivity growth, while the less productive ones experience a productivity slowdown.

Suggested Citation

  • Albrizio, Silvia & Kozluk, Tomasz & Zipperer, Vera, 2017. "Environmental policies and productivity growth: Evidence across industries and firms," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 209-226.
  • Handle: RePEc:eee:jeeman:v:81:y:2017:i:c:p:209-226
    DOI: 10.1016/j.jeem.2016.06.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0095069616300602
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:nbr:nberch:13348 is not listed on IDEAS
    2. Paul Lanoie & Michel Patry & Richard Lajeunesse, 2008. "Environmental regulation and productivity: testing the porter hypothesis," Journal of Productivity Analysis, Springer, vol. 30(2), pages 121-128, October.
    3. Yoruk, BarIs K. & Zaim, Osman, 2005. "Productivity growth in OECD countries: A comparison with Malmquist indices," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 401-420, June.
    4. Stefan Ambec & Mark A. Cohen & Stewart Elgie & Paul Lanoie, 2013. "The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness?," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 2-22, January.
    5. Philippe Aghion & Peter Howitt, 2006. "Joseph Schumpeter Lecture Appropriate Growth Policy: A Unifying Framework," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 269-314, 04-05.
    6. Ebru Alpay & Joe Kerkvliet & Steven Buccola, 2002. "Productivity Growth and Environmental Regulation in Mexican and U.S. Food Manufacturing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 887-901.
    7. Gray, Wayne B. & Shadbegian, Ronald J., 2003. "Plant vintage, technology, and environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 384-402, November.
    8. Tomasz Kozluk & Vera Zipperer, 2014. "Environmental policies and productivity growth: a critical review of empirical findings," OECD Journal: Economic Studies, OECD Publishing, vol. 2014(1), pages 155-185.
    9. Renaud Bourlès & Gilbert Cette & Jimmy Lopez & Jacques Mairesse & Giuseppe Nicoletti, 2013. "Do Product Market Regulations In Upstream Sectors Curb Productivity Growth? Panel Data Evidence For OECD Countries," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1750-1768, December.
    10. Arik Levinson & M. Scott Taylor, 2008. "Unmasking The Pollution Haven Effect," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 223-254, February.
    11. Michael Greenstone & John A. List & Chad Syverson, 2011. "The Effects of Environmental Regulation on the Competiveness of U.S. Manufacturing," Working Papers 11-03, Center for Economic Studies, U.S. Census Bureau.
    12. Rubashkina, Yana & Galeotti, Marzio & Verdolini, Elena, 2015. "Environmental regulation and competitiveness: Empirical evidence on the Porter Hypothesis from European manufacturing sectors," Energy Policy, Elsevier, vol. 83(C), pages 288-300.
    13. Eli Berman & Linda T. M. Bui, 2001. "Environmental Regulation And Productivity: Evidence From Oil Refineries," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 498-510, August.
    14. Paul Lanoie & Jérémy Laurent‐Lucchetti & Nick Johnstone & Stefan Ambec, 2011. "Environmental Policy, Innovation and Performance: New Insights on the Porter Hypothesis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(3), pages 803-842, September.
    15. J.B. Smith & W A. Sims, 1985. "The Impact of Pollution Charges on Productivity Growth in Canadian Brewing," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 410-423, Autumn.
    16. Karel Mertens & Morten O. Ravn, 2012. "Empirical Evidence on the Aggregate Effects of Anticipated and Unanticipated US Tax Policy Shocks," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 145-181, May.
    17. Wayne B. Gray, 1997. "Manufacturing Plant Location: Does State Pollution Regulation Matter?," NBER Working Papers 5880, National Bureau of Economic Research, Inc.
    18. Virginia D. McConnell & Robert M. Schwab, 1990. "The Impact of Environmental Regulation on Industry Location Decisions: The Motor Vehicle Industry," Land Economics, University of Wisconsin Press, vol. 66(1), pages 67-81.
    19. 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.
    20. Yang, Chih-Hai & Tseng, Yu-Hsuan & Chen, Chiang-Ping, 2012. "Environmental regulations, induced R&D, and productivity: Evidence from Taiwan's manufacturing industries," Resource and Energy Economics, Elsevier, vol. 34(4), pages 514-532.
    21. Becker, Randy A., 2011. "Local environmental regulation and plant-level productivity," Ecological Economics, Elsevier, vol. 70(12), pages 2516-2522.
    22. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-586, June.
    23. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    24. David Popp, 2015. "Using Scientific Publications to Evaluate Government R&D Spending: The Case of Energy," CESifo Working Paper Series 5442, CESifo Group Munich.
    25. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2006. "Distance to Frontier, Selection, and Economic Growth," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 37-74, March.
    26. 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.
    27. David Popp, 2015. "Using Scientific Publications to Evaluate Government R&D Spending: The Case of Energy," NBER Working Papers 21415, National Bureau of Economic Research, Inc.
    28. Hamamoto, Mitsutsugu, 2006. "Environmental regulation and the productivity of Japanese manufacturing industries," Resource and Energy Economics, Elsevier, vol. 28(4), pages 299-312, November.
    29. Claire Brunel & Arik Levinson, 2016. "Measuring the Stringency of Environmental Regulations," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(1), pages 47-67.
    30. Andrea Bassanini & Romain Duval, 2009. "Unemployment, institutions, and reform complementarities: re-assessing the aggregate evidence for OECD countries," Oxford Review of Economic Policy, Oxford University Press, vol. 25(1), pages 40-59, Spring.
    31. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
    32. Maria Bas & Åsa Johansson & Fabrice Murtin & Giuseppe Nicoletti, 2016. "The effects of input tariffs on productivity: panel data evidence for OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 401-424, May.
    33. Charles Dufour & Paul Lanoie & Michel Patry, 1998. "Regulation and Productivity," Journal of Productivity Analysis, Springer, vol. 9(3), pages 233-247, March.
    34. Matthew A. Cole & Robert J. R. Elliott, 2003. "Do Environmental Regulations Influence Trade Patterns? Testing Old and New Trade Theories," The World Economy, Wiley Blackwell, vol. 26(8), pages 1163-1186, August.
    35. Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
    36. M A Cole & R J R Elliott, 2003. "Do Environmental Regulations Influence Trade Patterns? Testing New and Old Trade Theories," The School of Economics Discussion Paper Series 0310, Economics, The University of Manchester.
    37. Barbera, Anthony J. & McConnell, Virginia D., 1990. "The impact of environmental regulations on industry productivity: Direct and indirect effects," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 50-65, January.
    38. repec:clg:wpaper:2008-02 is not listed on IDEAS
    39. 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 654-674, August.
    40. van Beers, Cees & van den Bergh, Jeroen C J M, 1997. "An Empirical Multi-country Analysis of the Impact of Environmental Regulations on Foreign Trade Flows," Kyklos, Wiley Blackwell, vol. 50(1), pages 29-46.
    41. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
    42. Brunnermeier, Smita B. & Cohen, Mark A., 2003. "Determinants of environmental innovation in US manufacturing industries," Journal of Environmental Economics and Management, Elsevier, vol. 45(2), pages 278-293, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:gam:jeners:v:10:y:2017:i:12:p:2131-:d:122976 is not listed on IDEAS
    2. Giulio Cainelli & Alessio D’Amato & Massimiliano Mazzanti, 2017. "Resource Efficiency, Environmental Policy and Eco-Innovations for a Circular Economy: Evidence from EU Firms," SPRU Working Paper Series 2017-24, SPRU - Science Policy Research Unit, University of Sussex Business School.
    3. repec:eee:eneeco:v:68:y:2017:i:c:p:271-282 is not listed on IDEAS
    4. Grégoire Garsous & Tomasz Kozluk, 2017. "Foreign Direct Investment and The Pollution Haven Hypothesis: Evidence from Listed Firms," OECD Economics Department Working Papers 1379, OECD Publishing.
    5. Giovanni Marin & Francesco Vona, 2018. "Climate policies and Skill-biased employment dynamics : evidence from EU countries," Sciences Po publications 23, Sciences Po.
    6. Sandro Montresor & Francesco Quatraro,, 2018. "Green Technologies and Smart Specialisation Strategies: A European Patent-Based Analysis of the Intertwining of Technological Relatedness and Key-Enabling-Technologies," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201808, University of Turin.
    7. repec:gam:jsusta:v:9:y:2017:i:10:p:1757-:d:113589 is not listed on IDEAS
    8. Xu (Susan) Tang, 2017. "Competition or Coordination: Strategic Environmental Policymaking Across OECD Countries," 2017 Papers pta721, Job Market Papers.

    More about this item

    Keywords

    Environmental policy stringency; Environmental regulation; Porter Hypothesis; Multifactor productivity;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeeman:v:81:y:2017:i:c:p:209-226. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/622870 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.