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Evaluating “Cash-for-Clunkers”: Program Effect on Auto Sales, Jobs, and the Environment

Author

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  • Li, Shanjun

    (Resources for the Future)

  • Linn, Joshua

    (Resources for the Future)

  • Spiller, Elisheba

Abstract

We investigate the effects of “Cash for Clunkers”, a $3 billion economic stimulus program, on new vehicle sales, employment, gasoline consumption, and the environment. Using Canada as the control group in a difference-in-differences framework, we find that the program increased new vehicle sales by about 0.39 million during July and August of 2009, while the net increase reduced to 0.25 million from June to December. The difference suggests that, as intended, the program significantly shifted sales to July and August from other months. Nevertheless, the program would result in only 8.58 to 28.28 million tons of CO2 emission reductions, implying a cost per ton ranging from $91 to $301 even after accounting for the benefit of the program in reducing criteria pollutants. In addition, the program is estimated to have created 3,676 job-years in the auto assembly and parts industries from June to December of 2009. That effect decreased to 2,050 by May 2010.

Suggested Citation

  • Li, Shanjun & Linn, Joshua & Spiller, Elisheba, 2010. "Evaluating “Cash-for-Clunkers”: Program Effect on Auto Sales, Jobs, and the Environment," RFF Working Paper Series dp-10-39, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-10-39
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-10-39.pdf
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    References listed on IDEAS

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    Cited by:

    1. James M. Sallee, 2011. "The Taxation of Fuel Economy," Tax Policy and the Economy, University of Chicago Press, vol. 25(1), pages 1-38.
    2. Chao Wei & Shanjun Li, 2014. "The Cost of Greening Stimulus: A Dynamic Discrete Choice Analysis of Vehicle Scrappage Programs," Working Papers 2014-12, The George Washington University, Institute for International Economic Policy.
    3. Mark Hoekstra & Steven L. Puller & Jeremy West, 2017. "Cash for Corollas: When Stimulus Reduces Spending," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 1-35, July.
    4. Adam Copeland & James Kahn, 2013. "The Production Impact Of “Cash-For-Clunkers”: Implications For Stabilization Policy," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 288-303, January.

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    More about this item

    Keywords

    CARS program; automobiles; employment; gasoline consumption; carbon dioxide emissions;
    All these keywords.

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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