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Air pollution spillovers and U.S. state productivity growth

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  • Neophyta Empora

Abstract

This study investigates the effect of pollution and pollution spillovers on the Total Factor Productivity (TFP) growth among the 48 contiguous U.S. states, for the period 1965-2002. Specifically, this study accounts for the spatial relationship between the states that arises from the transboundary nature of Sulphur dioxide (SO2) emissions and investigates how the dispersion of pollution affects economic growth. The relationship between TFP growth, pollution and pollution spillovers is estimated using a semiparametric smooth coefficient model that allows estimating the output elasticity of pollution and pollution spillovers for each state and each period and accounts for possible nonlinearities in the data. According to the results, the effect of spillover pollution on growth is negative and larger in magnitude than the positive effect of a state’s own emissions: decreases in emissions might not be so harmful for productivity growth.

Suggested Citation

  • Neophyta Empora, 2017. "Air pollution spillovers and U.S. state productivity growth," University of Cyprus Working Papers in Economics 06-2017, University of Cyprus Department of Economics.
    • Handle: RePEc:ucy:cypeua:06-2017
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    Keywords

    TFP Growth; Pollution; Transboundary Pollution Spillovers; Semiparametric Estimation;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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