CREAT: Census Research Exploration and Analysis Tool

Manufacturing Plant Location: Does State Pollution Regulation Matter?

July 1997

Written by: Wayne B Gray

Working Paper Number:

CES-97-08

Abstract

This paper tests whether differences across states in pollution regulation affect the location of manufacturing activity in the U.S. Plant-level data from the Census Bureau's Longitudinal Research Database is used to identify new plant births in each state over the 1963-1987 period. This is combined with several measures of state regulatory intensity, including business pollution abatement spending, regulatory enforcement activity, congressional pro-environment voting, and an index of state environmental laws. A significant connection is found: states with more stringent environmental regulation have fewer new manufacturing plants. These results persist across a variety of econometric specifications, and the strongest regulatory coefficients are similar in magnitude to thos4e on other factors expected to influence location, such as unionization rates. However, a subsample of high-pollution industries, which might have been expected to show much larger impacts, gets similar coefficients. This raises the possibility that differences between states other than environmental regulation might be influencing the results.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

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:
econometric, manufacturing, state, regulated, regulation, regulatory, impact, emission, pollution, environmental regulation, epa, pollution regulation, environmental, plant, federal, polluting, polluting industries, estimates pollution, indicator

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:
Metropolitan Statistical Area, Census of Manufactures, Longitudinal Research Database, National Science Foundation, Center for Economic Studies, National Bureau of Economic Research, Energy Information Administration, Census Bureau Longitudinal Business Database, Environmental Protection Agency, Pollution Abatement Costs and Expenditures, North American Free Trade Agreement

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