The effect of environmental enforcement on labor: environmental workers and production workers

Abstract

This study examines the effects of environmental enforcement on labor employed by regulated facilities. The empirical analysis uses panel data from an original survey of chemical manufacturing facilities regulated under the Clean Water Act. This study contributes to the literature in two ways. First, we distinguish between two types of labor employed by regulated facilities: labor dedicated to regulatory compliance (“environmental labor”) and labor dedicated to production (“production labor”). Second, we estimate the effect of environmental enforcement on production labor. Environmental enforcement seeks to induce compliance with Clean Water Act restrictions, i.e., discharge limits, by prompting greater environmental management. However, environmental labor and production labor play different roles regarding environmental management. Consistent with this difference, our empirical analysis explores the two labor outcomes separately. Our study explores various forms of enforcement, interpreted broadly to include monitoring inspections and enforcement actions, e.g., fines (“government interventions”). In general, our empirical results reveal that government interventions do not affect environmental labor, yet negatively affect production labor.