Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator

John A. List; Daniel L. Millimet; Per G. Fredriksson; W. Warren McHone

doi:10.1162/003465303772815844

Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator

John A. List¹; Daniel L. Millimet²; Per G. Fredriksson³; W. Warren McHone⁴

¹ University of Maryland, College Park · ² Southern Methodist University · ³ Methodist University · ⁴ University of Central Florida

The Review of Economics and Statistics 2003 open access

This study examines the effects of air quality regulation on economic activity. Anecdotal evidence and some recent empirical studies suggest that an inverse relationship exists between the stringency of environmental regulations and new plant formations. Using a unique county-level data set for New York State from 1980 to 1990, we revisit this conjecture using a seminonparametric method based on propensity score matching. Our empirical estimates suggest that pollution-intensive plants are responding to environmental regulations; more importantly, we find that traditional parametric methods used in previous studies may dramatically understate the impact of more stringent regulations.

DOI: 10.1162/003465303772815844
Volume: 85 (4)
Pages: 944-952
Language: en
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