Local Environmental Regulation and Plant-Level Productivity

25 Pages Posted: 9 Oct 2010 Last revised: 24 Aug 2011

See all articles by Randy A. Becker

Randy A. Becker

U.S. Census Bureau - Center for Economic Studies

Date Written: August 1, 2011

Abstract

This paper examines the impact of environmental regulation on the productivity of manufacturing plants in the United States. Establishment-level data from three Censuses of Manufactures are used to estimate 3-factor Cobb-Douglas production functions that include a measure of the stringency of environmental regulation faced by manufacturing plants. In contrast to previous studies, this paper examines effects on plants in all manufacturing industries, not just those in “dirty” industries. Further, this paper employs spatial-temporal variation in environmental compliance costs to identify effects, using a time-varying county-level index that is based on multiple years of establishment-level data from the Pollution Abatement Costs and Expenditures survey and the Annual Survey of Manufactures. Results suggest that, for the average manufacturing plant, there is no statistically significant effect on productivity of being in a county with higher environmental compliance costs. For the average plant, the main effect of environmental regulation may not be in the spatial and temporal dimensions.

Keywords: environmental regulation, productivity, U.S. manufacturing

Suggested Citation

Becker, Randy A., Local Environmental Regulation and Plant-Level Productivity (August 1, 2011). US Census Bureau Center for Economic Studies Paper No. CES-WP-10-30R, Available at SSRN: https://ssrn.com/abstract=1689061 or http://dx.doi.org/10.2139/ssrn.1689061

Randy A. Becker (Contact Author)

U.S. Census Bureau - Center for Economic Studies ( email )

4600 Silver Hill Road
Washington, DC 20233
United States

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