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Social Costs of Jobs Lost Due to Environmental Regulations

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Abstract

This paper estimates the social costs of job loss due to environmental regulation. Per job lost, potential social costs of job loss are high, plausibly over $100,000 in present value costs (2012 dollars) per permanently lost job. However, these social costs will typically be far less than the earnings associated with lost jobs, because labor markets and workers adjust, increased leisure has some value, and employers benefit from wage reductions. A plausible range for social costs is 8 - 32 percent of the associated earnings of the lost jobs. Social costs will be higher for older workers, high-wage jobs, and in high unemployment conditions. Under plausible estimates of job loss for most environmental regulations, the social costs of job loss will typically be less than 10 percent of other measured social costs of regulations. Therefore, adding in job loss is unlikely to tip many regulatory benefit-cost analyses.

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  • Timothy J. Bartik, 2013. "Social Costs of Jobs Lost Due to Environmental Regulations," Upjohn Working Papers and Journal Articles 13-193, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:13-193
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    Cited by:

    1. Elkoussa, Hayssam & Williams, John, 2019. "Managing Small Business Human Resources: An International Approach," MPRA Paper 91876, University Library of Munich, Germany.
    2. Alsayyed, Nidal & Zhu, Weihang, 2016. "Neural Network Models of Regulating Natural Capital Funds for Renewable Energy," MPRA Paper 74191, University Library of Munich, Germany.
    3. Timothy J. Bartik, 2014. "How Effects of Local Labor Demand Shocks Vary with Local Labor Market Conditions," Upjohn Working Papers and Journal Articles 14-202, W.E. Upjohn Institute for Employment Research.
    4. Alsayyed, Nidal & Zhu, Weihang, 2016. "A Preliminary Model of Regulating Natural Capital Funds for Renewable Energy," MPRA Paper 71321, University Library of Munich, Germany.

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    More about this item

    Keywords

    Benefit cost analysis; worker displacement; environmental regulation; social cost of labor;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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