Working Paper: NBER ID: w26093
Authors: Marc A. C. Hafstead; Roberton C. Williams III
Abstract: Political debates around environmental regulation often center around the effect of policy on jobs. Opponents decry the “job-killing” EPA and proponents point to “green jobs” as a positive policy outcome. And beyond the political debates, Congress requires the EPA to evaluate “potential losses or shifts of employment” that regulations under the Clean Air Act may cause. Yet there is a sharp disconnect between the political importance of the jobs question and the limited research on job effects of policy and general skepticism in the academic literature about the importance of those job effects for the costs and benefits of environmental regulation. \nIn this paper, we discuss how the existing research on jobs and environmental regulations often falls short in evaluating these questions and consider recent new work that has attempted to address these problems. We provide an intuitive discussion of key questions for how job effects should enter into economic analysis of regulations. And, using an economic model from Hafstead, Williams, and Chen (2018), we evaluate a range of environmental regulations in both the short and long-run to develop a set of key stylized facts related to jobs and environmental regulations and to identify the key questions that current models can’t yet answer well.
Keywords: Environmental regulation; Jobs; Labor economics; General equilibrium analysis
JEL Codes: E24; H23; J64; Q52; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Traditional empirical studies (C90) | Overestimated job losses (F66) |
| Environmental regulations (Q52) | Job reallocations from more polluting to less polluting industries (J62) |
| Job reallocations from more polluting to less polluting industries (J62) | Net job loss may be minimal (F66) |
| Job losses in regulated industries (K23) | Job gains in unregulated sectors (J48) |
| Type of policy implemented (D78) | Overall employment impacts of regulations (L51) |
| Economy-wide carbon taxes (H23) | Net job gains due to positive spillover effects (J68) |
| Direct and indirect effects of regulations (L51) | Total impact of regulations on employment (J48) |