Abstract
We combine international trade data from the U.S. Census Bureau with Toxics Release Inventory data from the Environmental Protection Agency to investigate the relationship between U.S. firms’ imports from low-wage countries (LWCs) and toxic emissions by their domestic plants. We find that plants release less toxic emissions on American soil when their parent firm imports more from LWCs. According to our estimates, when a plant’s parent firm increases its share of imports from LWCs by 10 percentage points, the plant’s toxic emissions on American soil decrease by about 4%. These effects are stronger for plants facing greater institutional pressures on environmental performance, such as plants located in dirtier U.S. counties. In addition, goods imported by U.S. firms from LWCs are in more pollution-intensive industries than goods imported from the rest of the world. Taken together, our results provide the first large-sample empirical evidence that U.S. firms offshore both production and pollution to the developing world.
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