Regional and Aggregate Economic Consequences of Environmental Policy Abstract: This paper shows how to combine microeconometric evidence on the effects of environmental policy with a macroeconomic model, accounting for general equilibrium spillovers that have mostly been ignored in the literature. To this end, we study the effects of a recent US air pollution policy. We use regression evidence on the policy’s impact across industries and local labor markets to calibrate a quantitative spatial model allowing for general equilibrium spillovers. Our model implies that the policy lowered emissions by 11.1%, but destroyed approximately 250’000 jobs. Ignoring spillovers overestimates job losses in polluting industries, but underestimates job losses in clean industries
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More about this item
Keywords
Environmental Policy; Employment; Trade; Clean Air Act;All these keywords.
JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
NEP fields
This paper has been announced in the following NEP Reports:- NEP-ENE-2024-07-15 (Energy Economics)
- NEP-ENV-2024-07-15 (Environmental Economics)
- NEP-INT-2024-07-15 (International Trade)
- NEP-URE-2024-07-15 (Urban and Real Estate Economics)
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