Working Paper: NBER ID: w20399
Authors: Randy Becker; Wayne Gray; Jordan Marvakov
Abstract: From 1990 to 2008, the real value of US manufacturing output grew by one-third while the pollution emitted from US factories fell by two-thirds. What accounts for this cleanup? Prior studies have documented that a relatively small share can be explained by changes in the composition of US manufacturing - a shift towards producing relatively more goods whose production processes involve less pollution. Those studies attribute the unexplained majority to "technique", a mix of input substitution, process changes, and end-of-pipe controls. But because that technique effect is a residual left over after other explanations, any errors or interactions in the original calculation could inflate the estimated technique. In this paper I provide the first direct estimate of the technique effect. I combine the National Emissions Inventories with the NBER-CES Manufacturing Industry Database for each of over 400 manufacturing industries. I aggregate across industries using analogs to the Laspeyres and Paasche price indexes for each of six major air pollutants. The calculations using this direct estimation of the technique effect support the research findings using indirect measures. From 1990 to 2008, production technique changes account for more than 90 percent of the overall cleanup of US manufacturing.
Keywords: Pollution; Manufacturing; Technique Effect; Environmental Policy
JEL Codes: Q52; Q53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| technique changes (O33) | pollution intensity (Q53) |
| technique effect (C90) | pollution cleanup (Q53) |
| pollution intensity (Q53) | emissions intensity among individual industries (L99) |
| technique changes (O33) | emissions intensity (L94) |
| composition changes (Y20) | pollution intensity (Q53) |