IDEAS home Printed from https://ideas.repec.org/p/ags/crae13/147489.html
   My bibliography  Save this paper

The Effects of the Clean Air Act on Local Industrial Wages

Author

Listed:
  • Kim, Kijin

Abstract

Since the beginning of the Clean Air Act, firms operating in regulated counties have faced with higher costs, which consequently had an impact on local labor markets. This paper investigates the effects of the air quality regulation on local manufacturing wages. Taking into account wage spillover explicitly into the model distinguishes this paper from existing studies in which spillover was ignored or was not a major focus. Using the 1982-2007 Census of Manufactures and the historical pollutant-specific nonattainment status for all counties, I construct the wage model with fixed effects partly based on the model specification in Greenstone (2002). I find the wage reduction in emitters induced by the regulations ranging from 2% to 10% depending on the pollutant, which in the 2005 dollar amount are equivalent to loss of roughly $800~$4,000 a year. I also find that the regulation effects are not uniform across industries: petroleum & coal, chemical & allied products and paper & allied products are influenced most among emitters. I find an evidence of the existence of spillover, but it is not so evident in the preferred fixed effects model.

Suggested Citation

  • Kim, Kijin, 2013. "The Effects of the Clean Air Act on Local Industrial Wages," 6th Annual Midwest Graduate Student Conference on Regional and Applied Economics (CRAE), April 5-6, 2013, Columbus, Ohio 147489, Midwest Graduate Student Conference on Regional and Applied Economics (CRAE), The Ohio State University, Department of Agricultural, Environmental and Development Economics.
  • Handle: RePEc:ags:crae13:147489
    DOI: 10.22004/ag.econ.147489
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/147489/files/Effect%20of%20the%20Clean%20Air%20Act%20_Kijin_.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.147489?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hanna, Rema & Oliva, Paulina, 2015. "The effect of pollution on labor supply: Evidence from a natural experiment in Mexico City," Journal of Public Economics, Elsevier, vol. 122(C), pages 68-79.
    2. John A. List & W. Warren McHone, 2000. "Measuring the effects of air quality regulations on "dirty" firm births: Evidence from the neo- and mature-regulatory periods," Papers in Regional Science, Springer;Regional Science Association International, vol. 79(2), pages 177-190.
    3. 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.
    4. Henderson, J Vernon, 1996. "Effects of Air Quality Regulation," American Economic Review, American Economic Association, vol. 86(4), pages 789-813, September.
    5. Randy A. Becker & J. Vernon Henderson, 2001. "Costs of Air Quality Regulation," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 159-186, National Bureau of Economic Research, Inc.
    6. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
    7. Kahn, Matthew E., 1997. "Particulate pollution trends in the United States," Regional Science and Urban Economics, Elsevier, vol. 27(1), pages 87-107, February.
    8. Hazilla, Michael & Kopp, Raymond J, 1990. "Social Cost of Environmental Quality Regulations: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 853-873, August.
    9. Vinod Mishra & Russell Smyth, 2011. "Environmental regulation and wages in China," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 55(8), pages 1075-1093, August.
    10. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    11. 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.
    12. Baltagi, Badi H. & Liu, Long, 2011. "Instrumental variable estimation of a spatial autoregressive panel model with random effects," Economics Letters, Elsevier, vol. 111(2), pages 135-137, May.
    13. Drewes, Torben, 1987. "Regional Wage Spillover in Canada," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 224-231, May.
    14. W. Reed Walker, 2013. "The Transitional Costs of Sectoral Reallocation: Evidence From the Clean Air Act and the Workforce," The Quarterly Journal of Economics, Oxford University Press, vol. 128(4), pages 1787-1835.
    15. Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July.
    16. Ostro, Bart D., 1983. "The effects of air pollution on work loss and morbidity," Journal of Environmental Economics and Management, Elsevier, vol. 10(4), pages 371-382, December.
    17. Greenstone, Michael, 2004. "Did the Clean Air Act cause the remarkable decline in sulfur dioxide concentrations?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 585-611, May.
    18. Bartel, Ann P & Thomas, Lacy Glenn, 1987. "Predation through Regulation: The Wage and Profit Effects of the Occupational Safety and Health Administration and the Environmental Protection Agency," Journal of Law and Economics, University of Chicago Press, vol. 30(2), pages 239-264, October.
    19. Forster, Bruce A., 1984. "The backward incidence of pollution control: A dual approach," Journal of Environmental Economics and Management, Elsevier, vol. 11(1), pages 14-17, March.
    20. Babcock, Linda & Engberg, John & Greenbaum, Robert, 2005. "Wage spillovers in public sector contract negotiations: the importance of social comparisons," Regional Science and Urban Economics, Elsevier, vol. 35(4), pages 395-416, July.
    21. 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, Oxford University Press, vol. 118(3), pages 1121-1167.
    22. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
    23. Wang, Leonard F. S., 1990. "Unemployment and the backward incidence of pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 18(3), pages 292-298, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Pizer, William A. & Kopp, Raymond, 2005. "Calculating the Costs of Environmental Regulation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 3, chapter 25, pages 1307-1351, Elsevier.
    3. Cui, Jingbo & Moschini, GianCarlo, 2020. "Firm internal network, environmental regulation, and plant death," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    4. Consoli, Davide & Marin, Giovanni & Marzucchi, Alberto & Vona, Francesco, 2016. "Do green jobs differ from non-green jobs in terms of skills and human capital?," Research Policy, Elsevier, vol. 45(5), pages 1046-1060.
    5. 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.
    6. Morgan, O. Ashton & Condliffe, Simon, 2009. "Spatial Heterogeneity in Environmental Regulation Enforcement and the Firm Location Decision among U.S. Counties," The Review of Regional Studies, Southern Regional Science Association, vol. 39(3), pages 239-252.
    7. Liu, Mengdi & Tan, Ruipeng & Zhang, Bing, 2021. "The costs of “blue sky”: Environmental regulation, technology upgrading, and labor demand in China," Journal of Development Economics, Elsevier, vol. 150(C).
    8. Randy A. Becker, 2011. "On Spatial Heterogeneity in Environmental Compliance Costs," Land Economics, University of Wisconsin Press, vol. 87(1), pages 28-44.
    9. Becker Randy A, 2003. "Pollution Abatement Expenditure by U.S. Manufacturing Plants: Do Community Characteristics Matter?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-23, December.
    10. Glenn Sheriff & Ann E. Ferris & Ronald J. Shadbegian, 2015. "How Did Air Quality Standards Affect Employment at U.S. Power Plants? The Importance of Stringency, Geography, and Timing," NCEE Working Paper Series 201501, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised May 2015.
    11. Michael Greenstone & Rema Hanna, 2014. "Environmental Regulations, Air and Water Pollution, and Infant Mortality in India," American Economic Review, American Economic Association, vol. 104(10), pages 3038-3072, October.
    12. Wolfgang Keller & Arik Levinson, 1999. "Environmental Compliance Costs and Foreign Direct Investment Inflows to U.S. States," NBER Working Papers 7369, National Bureau of Economic Research, Inc.
    13. Francesco Vona & Giovanni Marin & Davide Consoli & David Popp, 2018. "Environmental Regulation and Green Skills: An Empirical Exploration," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(4), pages 713-753.
    14. 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.
    15. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
    16. Joshua Graff Zivin & Matthew Neidell, 2012. "The Impact of Pollution on Worker Productivity," American Economic Review, American Economic Association, vol. 102(7), pages 3652-3673, December.
    17. Tanaka, Shinsuke, 2015. "Environmental regulations on air pollution in China and their impact on infant mortality," Journal of Health Economics, Elsevier, vol. 42(C), pages 90-103.
    18. Chen, Yuyu & Jin, Ginger Zhe & Kumar, Naresh & Shi, Guang, 2013. "The promise of Beijing: Evaluating the impact of the 2008 Olympic Games on air quality," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 424-443.
    19. Kahn, Matthew E., 2004. "Domestic pollution havens: evidence from cancer deaths in border counties," Journal of Urban Economics, Elsevier, vol. 56(1), pages 51-69, July.

    More about this item

    Keywords

    Environmental Economics and Policy;

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ags:crae13:147489. 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: . General contact details of provider: https://edirc.repec.org/data/daohsus.html .

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/daohsus.html .

    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.