Do Lax Environmental Regulations Attract Foreign Investment?

There has been considerable controversy over the empirical significance of the theoretically predicted pollution haven hypothesis. Generally, empirical papers have failed to find an effect on industrial location of weaker or stricter environmental regulations. In this paper we find confirmation of theoretical predictions. We present a statistical test of the impact of environmental regulations on the capital movement of polluting industries. The empirical study is conducted by examining foreign direct investment (FDI) of several US industries, representing industries with high pollution control costs (chemicals and primary metals) as well as industries with more modest pollution control costs (electrical and non-electrical machinery, transportation equipment, and food products). At issue is the effect of the laxity of environmental regulation on FDI. As laxity is not directly observed, we posit two equations, one for FDI determination and one for pollutant emissions, a variable positively correlated with the unobserved variable. We use aggregate national sulfur emissions as the pollutant. Using instruments for the unobserved variable, the statistical results show that the laxity of environmental regulations in a host country is a significant determinant of FDI from the US for heavily polluting industries and is insignificant for less polluting industries.     

The effects of air quality regulations on the location decisions of pollution-intensive manufacturing plants

This research examines the effects of the 1977 Clean Air Act Amendments (CAAA) on the location decisions of pollution-intensive manufacturing plants. We develop a panel data set to analyze plant births of polluting manufacturers over time as a function county-level attainment status of the federal standard for ozone pollution. We find that more stringent county-level environmental regulations impact pollution-intensive capital flows through deterring new plant births. We also find that the impact of stricter regulations varies by pollution-intensity of manufacturers, with results suggesting that federal guidelines have a greater impact on high pollution intensive manufacturers than more moderate polluters.      

Explaining International Differences in Genetically Modified Food Labeling Policies*

Many countries have adopted labeling policies for genetically modified (GM) food, and the regulations vary considerably across countries. We evaluate the importance of political‐economic factors implicit in the choice of GM food labeling regulations. Using an analytical model, we show that production and trade‐related interests play a prominent role in labeling decision‐making. This conclusion is validated by an empirical analysis of GM food labeling policy choices. We find that countries producing GM crops are more likely to have less stringent labeling policies. Food and feed exporters to the European Union (EU) and Japan are more likely to have adopted stricter labeling policies. Labeling regulations in Asia and Europe are similar to those of Japan and the EU. Countries with no labeling policies are less developed, with important rural sectors and are more likely to have ratified the Cartagena Protocol on Biosafety.     

Do Long‐Term Unemployed Workers Benefit from Targeted Wage Subsidies?

We evaluate a wage subsidy program that is targeted at long‐term unemployed workers in Germany. We use an alternative identification procedure compared to empirical studies conducted so far. Exploiting the particular program regulations and large administrative data we estimate the impact of program availability using a regression discontinuity framework. Our results suggest no significant impact of the availability of the subsidy on labor market outcomes of the target group. Even though our analysis lacks some statistical power, our findings do not support the substantial positive effects obtained from matching studies. As our approach does not require observability of all drivers of selection, previous empirical studies justifying government expenditures on wage subsidies based on matching methods should be reconsidered.     

Environmental regulation and love for variety

Using a model of monopolistic competition, we examine the relationship between intra‐industry trade and environmental regulation. The decisions on emission standards set by each country show strong strategic interactions. In closed economies regulations act as strategic substitutes, and in equilibrium there is under‐regulation relative to the cooperative outcome. Trade liberalization may lead to stricter or laxer environmental standards, depending on the consumers’ preference for product variety. In addition, we show that with open trade environmental regulations may act as strategic complements and countries may set environmental standards that are as strict (or stricter) than those in the cooperative outcome.     

环境规制能够改善技术学习的绿色绩效吗？

环境规制政策是解决环境污染问题的重要制度保障。然而,学者们对环境规制是否能够达到预期效果莫衷一是。为了进一步验证环境规制实施效果,建立了包含环境规制的多要素环境学习曲线模型,基于2001-2016年我国省域工业企业面板数据,从新视角研究了不同类型环境规制对不同技术学习模式绿色绩效的调节作用。研究结果表明：与经济环境规制相比,行政环境规制对提升工业企业技术学习绿色绩效的作用更显著;在干中学、研发中学和引进中学3种技术学习模式中,行政环境规制可以促进研发中学的绿色绩效;行政环境规制及经济环境规制的非线性调节效应都不显著。上述结论对合理设计和选择不同类型环境法规、促进企业技术学习和减少大气污染物排放具有重要意义。     

Environmental regulation and profitability: An application to Swedish pulp and paper mills

In this paper we analyze the impact on firm profits of the environmental regulations in the Swedish pulp and paper industry. The approach taken is a non-parametric programming model of the technology. A feature of this industry is that environmental regulations are determined individually for each mill. A question, then, is if these individual regulations have a similar impact on firm profits. The approach in this paper allows us to calculate both the regulated and unregulated profits, which means that the severity of the regulations, in terms of foregone profits, can be calculated for each mill. The empirical result shows that the impact on the mills varies substantially, and that the burden from the regulations is less severe in 1990 than in 1989.     

Does a one-size-fits-all approach to financial regulations alleviate default risk? The case of dual banking systems

Financial regulations are developed to curb financial and economic fragility costs without undermining the economic contributions of banks to economic development. To understand the impact financial regulations have on reducing the financial fragility of banks we use the probability-of-default of banks as a proxy for bank failure. After analyzing data collected from 15 countries with a dual banking system for the period 2000–2015, we find convincing evidence that not all financial regulations have risk-reducing benefits for banks and the impact of financial regulations on default risk is not the same for conventional banks (CBs) and Islamic banks (IBs). The empirical evidence suggests that regulations that lessen overall default risk have a greater impact on IBs while those increasing default risk have a greater impact on CBs. Based on our findings we recommend that regulators should consider the different natures of CBs and IBs and tailor financial regulations to suit these operationally distinct financial intermediaries.     

Do data policy restrictions impact the productivity performance of firms and industries?

This paper examines how policies regulating the cross‐border movement and domestic use of electronic data on the internet impact the productivity of firms in sectors relying on electronic data. In doing so, we collect regulatory information on a group of developed economies and create an index that measures the regulatory restrictiveness of each country's data policies. The index is based on observable policy measures that explicitly inhibit the cross‐border movement and domestic use of data. Using cross‐country firm‐level and industry‐level data, we analyse econometrically the extent to which these data regulations over time impact the productivity performance of downstream firms and industries, respectively. We show that stricter data policies have a negative and significant impact on the performance of downstream firms in sectors reliant on electronic data. This adverse effect is stronger for countries with strong technology networks, for servicified firms, and holds for several robustness checks.     

Regulation and shadow economy: empirical evidence for 25 OECD-countries

New empirical findings for the impact of regulations on economic activities in the shadow economy are presented here. A comprehensive regulation index covering major fields (e.g. labour and product market regulation and the quality of institutions) has been used to analyze the relationship between the density of regulations and the size of shadow economies. The empirical results from 25 OECD countries for the time period 1995–2005 show that—apart from tax burden and tax moral—main causes for the development of the size of shadow economies are labour and product market regulations, overall regulations and poor quality of official public institutions and administration. These findings can provide additional information on policy measures to tackle the problem of growing shadow economies.     

Asymmetric Causality Between Inflation and Uncertainty: Evidences from 33 Developed and Developing Countries

Empirical studies have provided conflicting findings about the relationship between inflation and inflation uncertainty. Thus, the direction of the causality is still questionable. The present paper is aimed to extend the existing literature using non-linearity models and asymmetric causality tests. For this purpose, the data for 33 developed and developing countries during 1988Q4-2016Q3 is used. The results showed an asymmetry in the inflation behavior which is specified by smooth transition process, as well as separating positive and negative shocks observed in causality test. The asymmetric causality between inflation and inflation uncertainty is confirmed in most countries, although the empirical evidence in favor of Cukierman-Meltzer hypothesis is found to be weaker than Friedman-Ball hypothesis.

     

Do Environmental Standards Harm Manufacturing Employment?

A major issue in the debate about imposing environmental standards on polluting firms is the possibility of negative effects on employment. We examine the impact of environmental regulations on employment in an empirical analysis. Norwegian data are used to study three manufacturing sectors with high shares of units under strict environmental regulations. We find that for two of these sectors, firms under strict environmental regulations had a higher tendency to increase employment and a lower tendency to exit than firms under weak or no environmental regulation. For the third sector, environmental regulations had no significant impact on employment.     

"污染天堂"假说与现实

以环境规制降低竞争力的推论为基础,一种假说提出环境标准低的国家会吸纳污染密集型产业集中,从而成为"污染天堂".一些实证研究并不支持环境规制降低竞争力的观点,没有完整的证据说明"污染天堂"的存在.发达国家在多边贸易谈判中不能以假说为依据要求发展中国家抬高环境标准.     

Bank ownership structure,regulations and risk-taking: evidence from commercial banks in Pakistan

This paper conducts the first empirical assessment of the theories concerning the influence of ownership structure on bank risk-taking in the presence of regulations in Pakistan. The sample used in this paper comprises a panel data of 26 banks in Pakistan, for the period from 2000 to 2014. The analysis provides evidence that increase in ownership concentration leads to an increase in bank risk-taking. Managerial ownership is associated with high risk-taking at low and high levels of managerial ownership while at intermediate level, managerial ownership has negative impact on bank risk-taking. Different types of ownership of banks in Pakistan have different impact on risk-taking. While government, family and institutional ownership have a positive impact on bank risk-taking, foreign ownership has a negative impact on bank risk-taking. Furthermore, the results show that capital regulations are important in influencing bank risk-taking with regard to higher ownership concentration. The findings of this paper suggest that the relation between bank risk-taking and capital regulations typically depends on the type of ownership.     

SHORT-TERM CONTRACTS REGULATIONS AND DYNAMIC LABOUR DEMAND: THEORY AND EVIDENCE

We present a dynamic labour demand model where we evaluate the impact of employment regulations on permanent and temporary employment. We consider three different kinds of regulations, namely firing costs, hiring costs and a constraint on temporary contracts. These regulations differently affect the size and composition of employment. The theoretical results are interpreted and questioned on the basis of empirical evidence on the employment effects of the regulation reforms that occurred in the major European countries in the period 1983–1999. The empirical analysis is based on a new set of time‐varying indicators on permanent employment protection, fixed‐term contracts and temporary agency work regulations. We find evidence in support of the hypothesis that fixed‐term contracts have been effective stepping‐stones to permanent jobs during the period under observation. On the contrary, flexible temporary agency work regulations seem to induce a substitution of permanent with temporary contracts.     

Corporate Lobbying, Regulatory Conduct and the Porter Hypothesis

Michael Porter, the influential Harvard management guru, has promoted the idea that compliance with stricter environmental regulations can afford secondary benefits to firms through improved product design, innovation, corporate morale and in other ways. Once these secondary benefits are factored, the net cost of compliance is argued to be lower than conventionally thought and may even be negative. Whilst environmental economists have rejected the Porter Hypothesis as being based on excessively optimistic expectations of the likely size of such secondary benefits the underlying ideas do enjoy significant credence in the business community. In the context of a lobbying model of regulatory policy-making we argue that the EPA should change the way it conducts regulatory policy to take account of Porter's views – even if it knows those views to be misguided. The model serves to illustrate the more general point that fashions in management thinking can be expected to impact the optimal conduct of regulatory policy.     

Skill Intensity in Foreign Trade and Economic Growth

This paper explores the link between trade structure, trade specialization and per capita income growth. It is argued that industrial upgrading in export specialization patterns has a positive long-run growth effect, while the effect of structural change in industrial import patterns is in principle ambiguous. A standard empirical growth model is augmented by various measures of structural change. The hypothesis that not trade per se matters, but that various types of trading activities impact differently on economic growth is tested on a sample of 45 countries (OECD members and selected Asian and Latin American countries) over the period 1981–1997. The data set comprises exports and imports for 35 manufacturing industries at the 3-digit level of the ISIC classification which are grouped according to skill intensity. The results of the dynamic panel estimation point towards a positive long-run growth effect arising from trade specialization in medium-high-skill-intensive industries. Further, important distinctions between the skill intensity of export and import patterns and their respective influence on economic development, as well as between the group of developing countries and OECD members are observed in this relationship.JEL classification: C23, F43, O19, O41, O57The author is grateful to Michael Landesmann and Robert Stehrer (wiiw), Neil Foster and Jesús Crespo Cuaresma (Department of Economics, University of Vienna), Michael Peneder (Austrian Institute of Economic Research) and two referees for valuable comments. This research is based on Jubiläumsfondsprojekt Nr. 8954, financial support by Oesterreichische Nationalbank is gratefully acknowledged.     

Impacts of fiscal decentralization on local development in Vietnam: A disaggregated analysis

After the Doi Moi reforms, Vietnam pursued fiscal decentralization to strengthen the autonomy and governance capacity of local governments. While several empirical studies analysed the impact of fiscal decentralization on the economic growth of Vietnamese provinces, very few studies examined its impact on their social development. This study represents an initial effort to fill this gap. The empirical analysis applied the panel corrected standard errors (PCSE) estimation and stochastic frontier analysis (SFA) to an updated panel data of 63 Vietnamese provinces, spanning the period from 2011 to 2019. The results indicate a positive impact of fiscal decentralization on both economic and social development as well as efficiency of resource utilization for development targets. However, realizing the full potential of fiscal decentralization requires the fulfilment of certain conditions.     

INVERSE RELATIONSHIP BETWEEN PRODUCTIVITY AND FARM SIZE: THE CASE OF CHINA

In developing agricultures, past research has suggested an inverse relationship between farm productivity and size. The raw data from China show such an inverse relationship. However, the inverse relationship disappears after we instrument for land area using the fact that one of the objectives of the land allocation process in rural China is to ensure local households to meet their nutritional needs. The empirical inverse relationship is likely due to the failure to account for the unobserved land quality that is unevenly distributed across the farm size continuum, rather than inherent to China's agriculture. (JEL O13, Q12, Q15)     

交易管制对居民要素收入份额的影响——基于我国省际截面样本的检验

根据交易管制下要素购买方决策均衡的变化,构建了要素收入份额模型,以考察交易管制对要素收入份额的影响。模型研究表明,准入管制越严,要素购买方的竞争程度越低,居民要素收入份额越小;对要素交易机会限制越严,要素保留价格越低,供给弹性越小,收入份额越小。以地区财政开支占GDP比重作为管制程度的代理变量的检验结果表明:管制越严,居民工资收入和货币资本的财产性及经营收入份额越低;资本要素收入份额比劳动要素收入份额的下降更显著。