Pollution Abatement and Employment.

Area of Science:

• Environmental Economics
• Labor Economics
• Industrial Organization

Background:

• Morgenstern et al. (2002) previously studied environmental regulation's employment effects.
• Their cost function relied on potentially inaccurate survey data for pollution abatement costs.

Purpose of the Study:

• To develop and apply a novel input distance function model.
• To analyze the employment effects of environmental regulations without using pollution abatement cost data.
• To measure factors influencing employment changes in the electric power industry.

Main Methods:

• Specification of an input distance function.
• Modeling the joint production of desirable and undesirable outputs.
• Empirical analysis using data from 80 coal-fired electric power plants (1995-2005).

Main Results:

• The input distance function effectively measures the relative importance of factors affecting employment.
• The model provides insights into employment dynamics without direct pollution abatement cost data.
• Analysis of coal-fired power plants reveals key drivers of employment changes.

Conclusions:

• The input distance function offers a robust alternative for studying environmental regulation's employment impacts.
• This approach enhances the accuracy of economic analyses in the presence of joint production.
• Findings contribute to understanding labor market adjustments to environmental policies.