The Impact of Pollution Abatement Investment on Productivity Change: AnEmpirical Comparison of the U.S., Germany, and Canada
It has often been asserted that imposition of environmental regulations in the 1970's may be a partial explanation for the productivity growth slowdowns experienced by most industrialized countries during that decade.The contention is that expenses incurred to satisfy these regulations, such as investment in pollution abatement capital, is unproductive in terms of measured output. Thus conventional productivity measures will be biased downward when such regulations are imposed. In this paper we construct a model which explicitly recognizes the difference between pollution abatement capital and "productive" capital and then use this framework to devleop an adjustment to nonparametric measures of productivity growth, purging them of the bias resulting from regulation. We measure the bias for the manufacturing sectors of three countries, the U.S., Canada and Germany, and thereby assess the impact of increased pollution abatement capital regulation on productivity growth. Our principal finding is that the bias, which depends on relative rates of growth of output and pollution abatement capital investment, is modest.
|Date of creation:||Oct 1985|
|Date of revision:|
|Publication status:||published as Conrad and Morrison, from Southern Economic Journal, January 1989.|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:1763. 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: ()
If references are entirely missing, you can add them using this form.