Thursday, February 14, 2008

Unmasking the pollution haven effect

It is good to see a pollution haven hypothesis paper using industry and trade data from 20 years ago can still get into a journal of the qualiy of International Economic Review. Of course Levinson and Taylor are two of the best known researchers in this area who do consistently excellent work. Scott Taylor (and Brian Copeland) can be considered the fathers of the "trade and the envvironment" literature.

I had come across this paper years ago and as an aside this is a clear example of the publishing lags involved in economics. This paper was probably started in 2003, finished in 2004 and published in 2008. Economists need to be patient.

International Economic Review

Volume 49 Issue 1 Page 223-254, February 2008


* Arik Levinson††Georgetown University, U.S.A.; University of Calgary, Canada and
* M. Scott Taylor†1†Georgetown University, U.S.A.; University of Calgary, Canada

*Manuscript received July 2004; revised September 2006.


We use theory and empirics to examine the effect of environmental regulations on trade flows. A simple model demonstrates how unobserved heterogeneity, endogeneity, and aggregation issues bias standard measurements of this relationship. A reduced-form estimate of the model, using data on U.S. regulations and trade with Canada and Mexico for 130 manufacturing industries from 1977 to 1986, indicates that industries whose abatement costs increased most experienced the largest increases in net imports. For the average industry, the change in net imports we ascribe to regulatory costs amounting to 10% of the total increase in trade volume over the period.


Interesting to note that Scott Taylor has a Bepress homepage. I have one of these and I believe ALL academics should have one. It is an excellent free service and fantastic for getting your papers read (this is of course relative).

My HOMEPAGE on Bepress.

Copeland and Taylor's "Trade and the Environment: Theory and Evidence" book can be found here.


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