Induced Innovation from Environmental Regulation: Evidence from China

Yangsiyu Lu (Oxford University)
Jacquelyn Pless (MIT Sloan School of Management)

Abstract : We take a heterogeneous difference-in-differences approach to estimate the effect of an environmental regulation on jobs and firm performance in China. We study both directly regulated "dirty" firms and indirectly regulated "clean" firms, which allows us to estimate net effects and address spillovers to clean firms in regulated regions. The regulation increases jobs by 5% for dirty firms and 8% for clean firms. Total factor productivity (TFP) increases by 4.4% and 10% for dirty and clean firms, respectively. We provide evidence that the most plausible explanation is adoption of pollution-reducing technology—a form of induced innovation. Differential effects for state-owned enterprises (SOEs) relative to private- and foreign-owned firms are consistent with weak enforcement for SOEs only. We also explore the distributional consequences of the regulation and find that the effects on TFP are positive for firms in wealthier and more-populated regions as opposed to poor and less-populated regions, but the positive effects on jobs are similar despite regional wealth and population.

Agency Organization and Funding in the Service of Wildlife Conservation

Dean Lueck (Indiana University)
Dominic Parker (University of Wisconsin)

Abstract : State wildlife departments are among the oldest conservation agencies in the United States. They formed during the late 19th and early 20th centuries in the wake of severe depletion of many native wildlife stocks and some cases of extinction. As stocks of species such as deer, elk, turkey, antelope, and waterfowl rebounded dramatically during the 20th century, the organization and funding of agencies also evolved. This paper examines the causes and consequences of these changes. In the late 19th century state intervention evolved from season closures and other limitations on access to a system of licenses managed by state agencies. This system was significantly modified in the mid-20th century when federal legislation directed federal excises taxes on hunting and fishing equipment to wildlife agencies for specific purposes on the condition that those agencies did not direct state license funds to non-wildlife avenues. These federal programs remain in place today and are the bulwark of funding for state wildlife agencies along with hunting and fishing license revenues. The paper provides an overview of the history of wildlife agency funding and organization and develops an economic framework for analyzing agency budgets and behavior before and after Pittman Robertson. The paper uses panel data on state agency budgets and allocations decisions from 1925 to 2018 to test the implications derived from the economic models.