Environmental Regulation and Labor Demand: What Does the Evidence Tell Us?

Understanding the potential effect of environmental regulation on employment is of broad interest to key stakeholders. Concerns encompass both short- and longer-term effects on workers within the regulated sector, affected communities that already suffer from a lack of employment opportunities, and...

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Bibliographic Details
Published in:Annual review of resource economics 2023-01, Vol.15 (1), p.177-197
Main Authors: Gray, Wayne B, Shadbegian, Ron, Wolverton, Ann
Format: Article
Language:English
Subjects:
Demand
Employment
environmental regulation
Equilibrium
JEL Q52
JEL Q58
labor demand
Labor market
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Summary:Understanding the potential effect of environmental regulation on employment is of broad interest to key stakeholders. Concerns encompass both short- and longer-term effects on workers within the regulated sector, affected communities that already suffer from a lack of employment opportunities, and net employment in the overall economy. We begin our review by presenting a neoclassical microeconomic framework demonstrating how environmental regulations might affect labor demand. We then summarize the main empirical findings from the literature, including sector-specific partial equilibrium estimates and general equilibrium approaches to identifying the employment impacts of regulations. We also briefly describe the literature on how environmental regulations affect labor supply. Finally, we discuss remaining research gaps.
ISSN:1941-1340
1941-1359
DOI:10.1146/annurev-resource-101422-115834