Thursday, January 19, 2012

Job Leakage and Local Regulation: Evidence from the Dirty Movie Industry

Los Angeles has some leading industries.  We have tourism, Kobe Bryant and our Universities (I'm including health care at the hospitals there) and dirty movie production.    We are about to run a natural experiment concerning the unintended consequences of unilateral regulation.  Los Angeles has mandated condom use in its "adult films".   I applaud public health efforts but I wonder whether this regulation will be effective or whether production will move to a "pollution haven"?  A "pollution haven" would be another location that has not past and doesn't plan to pass such regulation.   The interesting part here is that activists here are aware of this possibility.

To quote the piece:

"Mr. Weinstein (the president of the AIDS Healthcare Foundation) said the argument that the pornographic film industry would move out of Los Angeles is a “big lie.”
“They cannot just pick up their stakes and move to another state,” he said. “They’d hardly be welcomed in West Virginia or Utah or Mississippi, or even a place like Nevada, where legal prostitution is highly regulated and condoms are required. And we will follow them wherever they go.”  "
The actors can get on an airplane and film in a developing country.   Who would bear the incidence of this extra cost?  Will there be off-shoring of these jobs?