IDEAS home Printed from
   My bibliography  Save this paper

Evaluating “Cash-for-Clunkers”: Program Effect on Auto Sales, Jobs, and the Environment


  • Li, Shanjun

    () (Resources for the Future)

  • Linn, Joshua

    () (Resources for the Future)

  • Spiller, Elisheba


We investigate the effects of “Cash for Clunkers”, a $3 billion economic stimulus program, on new vehicle sales, employment, gasoline consumption, and the environment. Using Canada as the control group in a difference-in-differences framework, we find that the program increased new vehicle sales by about 0.39 million during July and August of 2009, while the net increase reduced to 0.25 million from June to December. The difference suggests that, as intended, the program significantly shifted sales to July and August from other months. Nevertheless, the program would result in only 8.58 to 28.28 million tons of CO2 emission reductions, implying a cost per ton ranging from $91 to $301 even after accounting for the benefit of the program in reducing criteria pollutants. In addition, the program is estimated to have created 3,676 job-years in the auto assembly and parts industries from June to December of 2009. That effect decreased to 2,050 by May 2010.

Suggested Citation

  • Li, Shanjun & Linn, Joshua & Spiller, Elisheba, 2010. "Evaluating “Cash-for-Clunkers”: Program Effect on Auto Sales, Jobs, and the Environment," Discussion Papers dp-10-39, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-10-39

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Gilbert E. Metcalf, 2008. "Using Tax Expenditures to Achieve Energy Policy Goals," American Economic Review, American Economic Association, vol. 98(2), pages 90-94, May.
    2. Abrams Burton A & Parsons George R, 2009. "Is CARS a Clunker?," The Economists' Voice, De Gruyter, vol. 6(8), pages 1-4, August.
    3. Carroll, Christopher D & Fuhrer, Jeffrey C & Wilcox, David W, 1994. "Does Consumer Sentiment Forecast Household Spending? If So, Why?," American Economic Review, American Economic Association, vol. 84(5), pages 1397-1408, December.
    4. Kenneth A. Small & Kurt Van Dender, 2007. "Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound Effect," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 25-52.
    5. Nada Eissa & Jeffrey B. Liebman, 1996. "Labor Supply Response to the Earned Income Tax Credit," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 605-637.
    6. Jason Bram & Sydney Ludvigson, 1998. "Does consumer confidence forecast household expenditure? a sentiment index horse race," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 59-78.
    7. Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2005. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 83-120, February.
    8. Knittel, Christopher R, 2009. "The Implied Cost of Carbon Dioxide under the Cash for Clunkers," Institute of Transportation Studies, Working Paper Series qt95b1c3t0, Institute of Transportation Studies, UC Davis.
    Full references (including those not matched with items on IDEAS)


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

    Cited by:

    1. James M. Sallee, 2011. "The Taxation of Fuel Economy," Tax Policy and the Economy, University of Chicago Press, vol. 25(1), pages 1-38.
    2. Mark Hoekstra & Steven L. Puller & Jeremy West, 2017. "Cash for Corollas: When Stimulus Reduces Spending," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 1-35, July.
    3. Adam Copeland & James Kahn, 2013. "The Production Impact Of “Cash-For-Clunkers”: Implications For Stabilization Policy," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 288-303, January.
    4. Chao Wei & Shanjun Li, 2014. "The Cost of Greening Stimulus: A Dynamic Discrete Choice Analysis of Vehicle Scrappage Programs," Working Papers 2014-12, The George Washington University, Institute for International Economic Policy.

    More about this item


    CARS program; automobiles; employment; gasoline consumption; carbon dioxide emissions;

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics


    Access and download statistics


    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:rff:dpaper:dp-10-39. 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: (Webmaster). General contact details of provider: .

    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.