The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures

Posted: 9 Dec 2002

See all articles by Michael Greenstone

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Abstract

This paper estimates the impacts of the Clean Air Act's division of counties into pollutant-specific nonattainment and attainment categories on measures of industrial activity obtained from 1.75 million Census of Manufactures plant observations. Emitters of the controlled pollutants in nonattainment counties are subject to greater regulatory oversight than emitters in attainment counties. The preferred statistical model for plant-level growth includes plant fixed effects, industry by period fixed effects, and county by period fixed effects. The estimates from this model suggest that in the first 15 years that the Clean Air Act was in force (1972-87), nonattainment counties (relative to attainment ones) lost approximately 590,000 jobs, $37 billion in capital stock, and $75 billion (1987 dollars) of output in pollution-intensive industries. These findings are robust across many specifications, and the effects are apparent across a wide range of polluting industries.

Suggested Citation

Greenstone, Michael, The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures. Journal of Political Economy, Vol. 110, December 2002, Available at SSRN: https://ssrn.com/abstract=348784

Michael Greenstone (Contact Author)

University of Chicago - Department of Economics

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Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

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