Did Smog Rules Influence Who Loses? Manufacturing Job Losses and the Great Recession

Abstract

Several studies of environmental policy have shown that clean air rules may lead to job losses. It is not clear, however, if the rules’ job effects vary with the business cycle. I show that during the Great Recession, rules that targeted smog pollution did influence which industries suffered job losses. The industries that were most likely to suffer faced higher costs associated with new smog controls. Compared with control groups, employment fell by an extra 3%. The results support claims that the new smog controls shifted the incidence of the job losses brought about by the Great Recession.