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Environmental Inspection Proclivity and State Manufacturing Growth: The US Experience from the 1990s

Author

Listed:
  • Christopher S. Decker

    (Department of Economics and Real Estate, College of Business Administration, University of Nebraska at Omaha)

  • John W. Maxwell

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

Abstract

In this paper we construct a ranking of states based on their proclivity to inspect facilities for environmental compliance. Our measure utilizes state-level inspections data supplied by the US Environmental Protection Agency. After developing our ranking, we use it to predict state-level growth in manufacturing establishments. In doing so, we find support for the notion that enforcement intensity adversely impacts such growth. Our results offer insight into why existing studies that examine the impact of environmental regulation on location and growth produce inconsistent results.

Suggested Citation

  • Christopher S. Decker & John W. Maxwell, 2010. "Environmental Inspection Proclivity and State Manufacturing Growth: The US Experience from the 1990s," Working Papers 2010-02, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    • Handle: RePEc:iuk:wpaper:2010-02
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    References listed on IDEAS

    as
    1. Paul E. Polzin, 2001. "Why Some States Grow Faster than Others: New Growth Models for State Economic Policy," Growth and Change, Wiley Blackwell, vol. 32(3), pages 413-425.
    2. Lyon,Thomas P. & Maxwell,John W., 2004. "Corporate Environmentalism and Public Policy," Cambridge Books, Cambridge University Press, number 9780521819473, September.
    3. Wayne B. Gray, 1997. "Manufacturing Plant Location: Does State Pollution Regulation Matter?," NBER Working Papers 5880, National Bureau of Economic Research, Inc.
    4. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    5. List, John A. & Co, Catherine Y., 2000. "The Effects of Environmental Regulations on Foreign Direct Investment," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 1-20, July.
    6. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 37(1), pages 29-53, October.
    7. Henderson, J Vernon, 1996. "Effects of Air Quality Regulation," American Economic Review, American Economic Association, vol. 86(4), pages 789-813, September.
    8. John A. List & W. Warren McHone, 2000. "Ranking State Environmental Outputs: Evidence from Panel Data," Growth and Change, Wiley Blackwell, vol. 31(1), pages 23-39.
    9. Gray, Wayne B. & Deily, Mary E., 1996. "Compliance and Enforcement: Air Pollution Regulation in the U.S. Steel Industry," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 96-111, July.
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    More about this item

    Keywords

    Monitoring and Enforcement; Environmental Regulations; Business Formation Growth;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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