Journal Article

The Effect of Environmental Regulation on Power Sector Employment: Phase I of the Title IV SO2 Trading Program

Ferris, Ann E., Wolverton, Ann, Shadbegian, Ronald J.

2014

Overview

We use panel data on fossil fuel fired power plants to examine the impact of Phase I of the Title IV SO2 trading program on electric utility employment. We find little evidence that power plants had significant decreases in employment during Phase I relative to non–Phase I power plants. This finding holds whether we assume a plant- or utility-level decision model of compliance. When we disaggregate by year, we find that employment is significantly lower only in Phase I plants relative to non–Phase I plants in the first year of compliance but not in subsequent years. However, even this effect is not statistically significant at the utility level. Furthermore, we find little evidence of a significant employment effect for subsets of plants or utilities that pursue particular compliance strategies. Controlling for an NOx rate-based standard that partially overlaps with the SO2 trading program does not change our findings.

• Publisher: University of Chicago Press