Productivity Program Meeting

NBER Reporter, Winter 1997 | Go to article overview
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Productivity Program Meeting

NBER Research Associates John C. Haltiwanger, University of Maryland; Ariel Pakes, Yale University; and Mark J. Roberts, Pennsylvania State University, organized the most recent meeting of the NBER's Program on Productivity. The agenda for the December 12 gathering was:

Michael Greenstone, Princeton University, "The Marginal Effects of Environmental Regulations on the Manufacturing Sector: Evidence from the 1970 and 1977 Clean Air Amendments"

Discussant: Christopher Timmins, Yale University

Randy Becker, Brown University, and J. Vernon Henderson, NBER and Brown University, "Effects of Air Quality Regulations on Polluting industries" (NBER Working Paper No. 6160)

Discussant: Robert Schwab, University of Maryland

Sofronis Clerides, Yale University; Saul Lach, NBER and Hebrew University; and James Tybout, Georgetown University, "Is Learning-by-Exporting Important? Microdynamic Evidence from Colombia, Mexico, and Morocco"

Discussants: Andrew Bernard, NBER and Yale University, and Jensen, Carnegie-Mellon University

Lanier Benkard, Yale University, "Learning and Forgetting: the Dynamics of Aircraft Production"

Discussant: Dennis Epple, Carnegie-Mellon University

Brent Boning, Carnegie-Mellon University: Casey Ichniowski, NBER and Columbia University; and Kathryn Shaw, NBER and Carnegie-Mellon University, "Incentive Pay for Production Workers: An Empirical Analysis"

Discussant: George Baker, Harvard University

Sandra E. Black, Federal Reserve Bank of New York, and Lisa M. Lynch, NBEr and Tufts University, "The Impact of Workplace Practices and Information Technology on Productivity"

Discussant: Steven Olley, NBER and Georgetown University.

Greenstone presents new evidence on the impact of federal environmental laws on the manufacturing sector by using pollution categories established by the EPA after the passage of the Clean Air Act Amendments of 1970. Specifically, the EPA designated high or low regulation status for four pollutants to each county, depending upon whether the national air quality standards were met there. Controlling for a wide set of factors, including transitory shocks to polluting industries and plant characteristics, Greenstone finds that a county's pollutant-specific high-regulation designation significantly affected the growth of employment, the rate of net investment, and the growth of shipments of polluting plants relative to non-polluting ones. Moreover, the effects differed across the four regulations and across plants decisions to enter, exit, expand or contract.

Using plant data for 1963 to 1992, Becker and Henderson examine the unintended effects of air quality regulation on decisions of major polluters. A key regulatory tool since 1978 is the annual designation of county air quality attainment status, where non-attainment status triggers specific equipment requirements for new and existing plants. In the later years of regulation, nonattainment status reduces expected "births" in polluting industries by 40-50 percent, resulting in a shift of polluting activity to cleaner, less populated attainment areas. Starting in the 1970s, effects appear first for industries with bigger plant sizes and then, within industries, first for corporate plants relative to the much smaller non-affiliate, or single-plant firm sector. In all industries, non-affiliates face less regulation than the bigger corporate plants, resulting in a permanent shift away from corporate plant production in some industries. Older plants benefit from grandfathering provisions, greatly enhancing survival probabilities. Finally, the negotiation and permitting process under regulation appears to induce much greater up-front investments by new plants, so that, in non-attainment areas, regulation induces 50-100 percent increases in initial plant sizes compared to attainment areas.

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