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Regional and Aggregate Economic Consequences of Environmental Policy

Author

Listed:
  • Tom Schmitz

    (Queen Mary University of London and CEPR)

  • Italo Colantone

    (Bocconi University, Baffi-Carefin Research Centre, CESifo and FEEM)

  • Gianmarco Ottaviano

    (Bocconi University, Baffi-Carefin Research Centre, CEP, CEPR and IGIER)

Abstract

This paper evaluates the aggregate impact of air pollution regulations introduced by the US Environmental Protection Agency in the early 2000s. We first provide regression evidence on the regulations’ effects across industries and local labor markets. We then use these results to calibrate a quantitative model allowing for general equilibrium spillovers through trade, migration, industry switching, input-output linkages and emission externalities. Our model implies that regulations lowered emissions by 11.1%, but also destroyed between 228’000 and 267’000 jobs. Ignoring general equilibrium spillovers and naively extrapolating from our regressions overestimates job losses in polluting industries, but underestimates job losses in clean industries.

Suggested Citation

  • Tom Schmitz & Italo Colantone & Gianmarco Ottaviano, 2024. "Regional and Aggregate Economic Consequences of Environmental Policy," Working Papers 980, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:980
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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2024/wp980.pdf
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    More about this item

    Keywords

    Environmental Policy; Fine Particles; Clean Air Act; Employment; Trade;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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