Friday, July 06, 2007

Environmental Regulations and employment + comments

The motivation for this post is 3-fold. First, some blatant self-publicity; second, to discuss academic publishing; and third, to highlight the difference is data quality between the US and the EU.

1. Our paper has just been published:

Do Environmental Regulations Cost Jobs? An Industry-Level Analysis of the UK
This paper revisits the 'jobs versus the environment' debate and provides the first analysis for a country other than the US. We firstly examine the impact of environmental regulations on employment assuming such regulations are exogenous. However, for the first time in a study of this nature, we then allow environmental regulation costs and employment to be endogenously determined. Environmental regulation costs are not found to have a statistically significant effect on employment whether such costs are treated as being exogenous or endogenous. We therefore find no evidence of a trade-off between jobs and the environment.

Our results tend to support those found in a number of US studies.

2. The process of publishing academic papers in Economics is renowned for long delays between submitting a paper and seeing it in print. This can take over 2 years with authors often waiting a year before they even receive referee reports. In my experience this process has improved in recently. One reason for this I believe is the emergence of the online journals the best known of which is the Berkeley Electronic Press (Bepress) system.

The key to the system is that:
Submissions are guaranteed to receive a decision within 10 weeks. The median decision time is 52 days. We also offer simultaneous consideration at 4 quality-rated tiers1.

Our small offering was accepted for the bottom tier (boo, hiss). But as it says on the tin, we got our first reports within 10 weeks, the revisions were again reviewed within 10 weeks and then the paper was published. Even with revisions this was still a rapid process compared with the existing process. What is the cost? Submission is free but the individual cost is the commitment to referee two papers when sent within 10 weeks (or face a large retrospective submission fee).

This is an excellent method of incentivising academics to just sit down and write a review. A referee report usually takes between 1 and 2 days (or is that just me). However, most academics will put a paper on a pile for 6 months and then eventually, after a written warning, write the report in a day. The Bepress system merely acts to focus the mind a little.

A special mention should go to Don Fullerton, University of Texas who was the editor of the journal we published in, The B.E. Journal of Economic Analysis & Policy. His editing was exceptional and must be very time consuming. For academics to give so much time and effort to the often thankless job of editing a journal is humbling - so thanks to Don Fullerton.

Of course, the delay that the "established" journals impose may well be strategic. Knowing that a long lag exists should put off spurious submissions and is a signal of quality. Only the best need apply. This saves the journal considerable administrative costs. A high submission fee has a similar effect. Professor Derek Lesley has a good paper on this published in the American Economic Review. See the link for long and short versions of his excellent paper.

3. In the writing of the above paper (and other works) it became clear that, as UK based academics, we face a trade off with no easy solution that goes to the heart of what academics actually do.

In our case, writing a paper begins with:

(A) a question that is usually a combination of chatting over coffee, reading newspapers, blogs, books, working papers and published papers, with a little thinking thrown in.

(B) then we ask, "how can we answer this question?" (after checking whether it has been answered before, how it has been answered before and which data did it use). As UK academics our preference is to work on UK or EU data. (1) because we know more about UK policy and (2) we would like to contribute to the policy debate in the UK. The ideal is if the question is new but it is still possible to write a decent article (in theory) using different (better) methodologies of data for a different country (assuming there is reason to expect different results).

However, herein lies the problem. Data for the US is, in general, in a different league to the UK and Europe (not to mention developing countries).

It is becoming clear that often, to answer a question well enough to be publishable in a top journal, one would need to use US data - there is more of it, it is better quality, it is more disaggregated etc. Otherwise referee's say, "nice question, nice answer but your data are rubbish - Reject". Should we therefore have gone straight to US data? (We have done this on a couple of occasions). The problem with this is that (1) we would need to spend time learning the policy framework of the US to permit more insightful policy recommendations (2) data is not always so easy to obtain for non-US based academics or the costs can be prohibitive.

The answer - the UK (ONS) and Europe need to increase both the quality and the availability of their data so EU based economists can answer the big questions using UK/EU data. Of course the costs will be large but one good academic paper with an insightful policy prescription could save millions. Examples welcome.

In the short run we will continue to mix and match but will look closely at using the more comprehensive US data if we stumble upon the "big idea".

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