Working Paper: NBER ID: w20808
Authors: E. Mark Curtis
Abstract: This paper tests how a major cap-and-trade program, known as the NOx Budget Trading Program (NBP), impacted labor markets in the regions where it was implemented. The cap-and-trade program dramatically decreased levels of NOx emissions and added substantial costs to energy producers. Using a triple-differences approach that takes advantage of the geographic and time variation of the program as well as variation in industry energy-intensity levels, I examine how employment dynamics changed in manufacturing industries whose production process requires high levels of energy. After accounting for a variety of flexible state, county and industry trends, I find that employment in the manufacturing sector dropped by 1.3% as a result of the NBP. Young workers experienced the largest employment declines and earnings of newly hired workers fell after the regulation began. Employment declines are shown to have occurred primarily through decreased hiring rates rather than increased separation rates, thus mitigating the impact on incumbent workers.
Keywords: No keywords provided
JEL Codes: Q28; Q38; Q5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| NOx Budget Trading Program (NBP) (Q58) | employment in the manufacturing sector (L60) |
| energy intensity (L94) | manufacturing employment (L60) |
| NOx Budget Trading Program (NBP) (Q58) | earnings of newly hired workers (J31) |
| NOx Budget Trading Program (NBP) (Q58) | reduced hiring rates (J63) |