Working Paper: NBER ID: w7297
Authors: Arik Levinson
Abstract: This paper describes a new, industry-adjusted index of state environmental compliance costs from 1977 to 1994. The index has two principal advantages: it controls for states' industrial compositions, and it can be calculated for 17 years, thus facilitating comparisons both among states and within states over time. Several notable facts emerge. First, differences in states' industrial compositions play a large role in determining their environmental compliance costs. Second, after controlling for industrial composition, the variance across states in compliance costs declined steadily between 1977 and 1994. Third, this cost index is negatively correlated with subjective indices of state environmental efforts compiled by various environmental organizations. In sum, the cost index described here provides some new data on historical trends in state regulatory differences, differs from the conventional wisdom regarding states' relative environmental efforts, and provides a useful tool for researchers exploring the effects of compliance costs on economic activity.
Keywords: Environmental Compliance Costs; State Regulations; Foreign Direct Investment
JEL Codes: Q53; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| industrial composition (L69) | environmental compliance costs (Q52) |
| regulatory changes (G18) | variance in compliance costs (Q52) |
| environmental compliance costs (Q52) | perceived efforts by environmental organizations (F64) |