Carbon Cap & Trade: What Do We Know About Jobs Impacts?
Erin Mansur and I have written a paper focused on estimating how the count of manufacturing jobs in a local area responds to that area's labor regulation, environmental regulation and electricity prices. Abstracting from transportation costs of inputs and shipments of output to final consumers, a cost minimizing production facility will seek out a geographical area featuring low regulation and low electricity prices. Given that industries differ with respect to their labor intensity, pollution intensity, and electricity they use per dollar of output they create, we predict that those industries that are the most electricity intensive (i.e they use a lot of electricity to make their output) will respond the most to electricity prices.
Our econometric evidence supports all three of these claims.
As the political parties continue to debate the costs and benefits of enacting carbon pricing. Here is some evidence. Erin and I ask the following question. If a state such as California enacts a $15 per ton carbon price while all other states do nothing, what will happen to California's total count of manufacturing jobs given historical patterns from 1998 until 2006.
We predict that such carbon pricing will raise industrial electricity prices by .4 cents per KWh. California's manufacturing industry is not a major user of electricity and so we predict job loss of 6,648 jobs or a -.5% decline.
Before opponents of cap and trade start to cite these numbers, it is important that clear headed folks keep in mind that this legislation will also stimulate the vaunted "green jobs" for the State. If this legislation can be shown to create more than 7,000 new jobs for California then I would be more confident in calling this legislation a net jobs creator.
The key point that nerds need to study is that such legislation simultaneously "destroys jobs" and "creates jobs". Here is another NBER study.
Given that incumbent firms (who are part of the "old economy") already exist and will complain about placing a positive price on carbon emissions, there is a political interest group asymmetry. Many of the "green jobs" firms who will be born because of this regulation do not exist yet and thus cannot lobby in favor of the legislation.
Our econometric evidence supports all three of these claims.
As the political parties continue to debate the costs and benefits of enacting carbon pricing. Here is some evidence. Erin and I ask the following question. If a state such as California enacts a $15 per ton carbon price while all other states do nothing, what will happen to California's total count of manufacturing jobs given historical patterns from 1998 until 2006.
We predict that such carbon pricing will raise industrial electricity prices by .4 cents per KWh. California's manufacturing industry is not a major user of electricity and so we predict job loss of 6,648 jobs or a -.5% decline.
Before opponents of cap and trade start to cite these numbers, it is important that clear headed folks keep in mind that this legislation will also stimulate the vaunted "green jobs" for the State. If this legislation can be shown to create more than 7,000 new jobs for California then I would be more confident in calling this legislation a net jobs creator.
The key point that nerds need to study is that such legislation simultaneously "destroys jobs" and "creates jobs". Here is another NBER study.
Given that incumbent firms (who are part of the "old economy") already exist and will complain about placing a positive price on carbon emissions, there is a political interest group asymmetry. Many of the "green jobs" firms who will be born because of this regulation do not exist yet and thus cannot lobby in favor of the legislation.
Panel B: Simulation of Carbon Policy ($15/ton of CO2) by State
| Change in | Percent | Average | Change in | |
| State | Employment | Change | Electricity Index | Electricity Price |
| Ohio | -27,736 | -4.8% | 26.9% | $0.013 |
| Pennsylvania | -25,218 | -4.7% | 28.4% | $0.010 |
| Texas | -20,471 | -2.8% | 22.3% | $0.009 |
| Indiana | -18,933 | -5.4% | 27.4% | $0.013 |
| North Carolina | -18,399 | -5.4% | 25.4% | $0.009 |
| Michigan | -16,653 | -3.4% | 21.6% | $0.013 |
| Wisconsin | -15,759 | -4.7% | 27.4% | $0.012 |
| New York | -15,146 | -3.1% | 22.4% | $0.011 |
| Georgia | -14,930 | -6.5% | 28.0% | $0.009 |
| Illinois | -14,466 | -2.6% | 26.1% | $0.012 |
| Tennessee | -13,309 | -5.8% | 26.2% | $0.010 |
| Alabama | -12,445 | -7.2% | 28.5% | $0.009 |
| New Jersey | -11,495 | -3.9% | 27.8% | $0.009 |
| Missouri | -10,928 | -5.5% | 22.8% | $0.011 |
| South Carolina | -10,508 | -6.4% | 30.7% | $0.009 |
| Florida | -10,441 | -3.4% | 21.4% | $0.009 |
| Virginia | -10,396 | -6.5% | 25.7% | $0.010 |
| Minnesota | -8,498 | -3.8% | 20.8% | $0.012 |
| California | -6,648 | -0.5% | 19.5% | $0.004 |
| Kentucky | -6,642 | -5.0% | 25.2% | $0.013 |
| Maryland | -6,612 | -5.6% | 24.1% | $0.011 |
| Louisiana | -6,522 | -6.4% | 26.1% | $0.009 |
continued on next page.
Table 7, Panel B: Continued
| Change in | Percent | Average | Change in | |
| State | Employment | Change | Electricity Index | Electricity Price |
| Arkansas | -5,055 | -5.9% | 26.4% | $0.009 |
| Massachusetts | -5,053 | -1.9% | 22.3% | $0.011 |
| Iowa | -4,482 | -4.9% | 23.6% | $0.012 |
| Kansas | -3,916 | -3.9% | 19.0% | $0.010 |
| Connecticut | -3,874 | -2.2% | 19.7% | $0.011 |
| Washington | -3,857 | -1.8% | 20.5% | $0.004 |
| Oklahoma | -3,613 | -3.8% | 24.3% | $0.010 |
| Colorado | -3,496 | -2.9% | 20.4% | $0.004 |
| Mississippi | -3,224 | -7.7% | 22.7% | $0.009 |
| Oregon | -3,177 | -2.3% | 21.6% | $0.004 |
| Utah | -2,353 | -2.6% | 21.2% | $0.004 |
| Nebraska | -2,159 | -4.4% | 22.1% | $0.012 |
| Rhode Island | -1,694 | -3.3% | 24.4% | $0.011 |
| Arizona | -1,503 | -0.9% | 19.3% | $0.004 |
| New Hampshire | -1,400 | -2.9% | 19.8% | $0.011 |
| South Dakota | -917 | -5.8% | 19.9% | $0.008 |
| Vermont | -710 | -4.7% | 12.3% | $0.011 |
| West Virginia | -684 | -2.4% | 38.6% | $0.013 |
| New Mexico | -654 | -3.1% | 19.3% | $0.004 |
| Montana | -632 | -8.3% | 30.6% | $0.004 |
| Nevada | -584 | -1.5% | 25.7% | $0.004 |
| Idaho | -518 | -2.4% | 10.1% | $0.004 |
| Delaware | -514 | -2.9% | 26.3% | $0.009 |
| Maine | -462 | -2.1% | 28.4% | $0.009 |
| Wyoming | -454 | -10.6% | 23.7% | $0.004 |
| North Dakota | -251 | -1.8% | 20.1% | $0.012 |
| District of Columbia | 0 | 0.0% | 19.4% | $0.009 |
posted by Matthew Kahn at 9:00 AM
1 Comments:
Thank you for very good blog about Pooper Scoopers. It's very nice.
Post a Comment
<< Home