Journal Article

Environmental Regulations and the Welfare Effects of Job Layoffs in the United States: A Spatial Approach

Nicolai V. Kuminoff, Todd Schoellman and Christopher Timmins

in Review of Environmental Economics and Policy

Published on behalf of Association of Environmental and Resource Economists

Volume 9, issue 2, pages 198-218
Published in print July 2015 | ISSN: 1750-6816
Published online July 2015 | e-ISSN: 1750-6824 | DOI: https://dx.doi.org/10.1093/reep/rev006
Environmental Regulations and the Welfare Effects of Job Layoffs in the United States: A Spatial Approach

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  • Household Analysis
  • Environmental Economics
  • Welfare Economics
  • Mobility, Unemployment, and Vacancies

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This article develops welfare-consistent measures of the employment effects of environmental regulation. Our analysis is based on a microeconomic model of how households with heterogeneous preferences and skills decide where to live and work. We use the model to examine how job loss and unemployment would affect workers in Northern California. Our stylized simulations produce earnings losses that are consistent with empirical evidence. They also produce two new insights. First, we find that earnings losses are sensitive to business cycle conditions. Second, we find that earnings losses may substantially understate welfare losses once we account for the fact that workers may have to commute further or live in a less desirable community after losing a job.

Keywords: D61; J6; Q52; R2; environmental regulation; employment effects; layoffs; consumer welfare; sorting

Journal Article.  10350 words.  Illustrated.

Subjects: Household Analysis ; Environmental Economics ; Welfare Economics ; Mobility, Unemployment, and Vacancies

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