Environmental Regulation and Manufacturing Productivity at the Plant Level / Wayne B. Gray, Ronald J. Shadbegian.

Format:

Book

Author/Creator:

Gray, Wayne B.

Contributor:

National Bureau of Economic Research.

Shadbegian, Ronald J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4321.

NBER working paper series no. w4321

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1993.

Summary:

We analyze the connection between productivity, pollution abatement expenditures, and other measures of environmental regulation for plants in three industries (paper, oil, and steel). We examine data from 1979 to 1985, considering, both labor and total factor productivity, both levels and growth rates, and both annual measures and averages over the period. We find a strong connection between regulation and productivity when regulation is measured by compliance costs. More regulated plants have significantly lower productivity levels and slower productivity growth rates than less regulated plants. The magnitude of the impacts are larger than expected: a $1 increase in compliance costs appears to reduce TFP by the equivalent of $3 to $4. Thus, commonly used methods of calculating the impact of regulation on productivity are substantially underestimated. Other measures of regulation (compliance status, enforcement activity, and emissions) show much less consistent results. Higher enforcement, lower compliance, and higher emissions are generally associated with lower productivity levels and slower productivity growth, but the coefficients are rarely significant.

Notes:

Print version record

April 1993.