TY  - JOUR
AU  - Gray,Wayne B.
AU  - Shadbegian,Ronald J.
TI  - Environmental Regulation and Manufacturing Productivity at the Plant Level
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4321
PY  - 1993
Y2  - April 1993
UR  - http://www.nber.org/papers/w4321
L1  - http://www.nber.org/papers/w4321.pdf
N1  - Author contact info:
Wayne B. Gray
Department of Economics
Clark University
950 Main Street
Worcester, MA 01610
Tel: 508/793-7693
Fax: 508/793-8849
E-Mail: WGRAY@CLARKU.EDU
M2  - featured in NBER digest on 1993-12-01
AB  - 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.
ER  -