Effects of environmental regulation on foreign and domestic plant births: is there a home field advantage?

    Authors

    J. A. List; W. W. McHone;D. L. Millimet

    Comments

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    Abbreviated Journal Title

    J. Urban Econ.

    Keywords

    foreign direct investment; environmental regulations; propensity score; matching; AIR-QUALITY REGULATION; PROPENSITY SCORE; LOCATION DECISIONS; DIRECT-INVESTMENT; COUNT DATA; CAUSAL; POLICY; ESTIMATOR; PROGRAMS; STATES; Economics; Urban Studies

    Abstract

    Whether environmental regulations alter capital flows remains a hotly debated issue. This paper uses county-level data to examine the location decisions of domestic and foreign firms in a single empirical model and tests for asymmetries by firm origin in the degree to which capital flows are influenced by environmental standards. We find that while domestic firms are influenced by environmental regulations, foreign firms are not. Since the benefits of foreign investment are well-documented-foreign plants typically provide more jobs and increase local wages by more than domestic plants-this result suggests a double-dividend is available: foreign plants provide an economic stimulus and are not unduly influenced by environmental protections. (C) 2004 Elsevier Inc. All rights reserved.

    Journal Title

    Journal of Urban Economics

    Volume

    56

    Issue/Number

    2

    Publication Date

    1-1-2004

    Document Type

    Article

    Language

    English

    First Page

    303

    Last Page

    326

    WOS Identifier

    WOS:000223757600006

    ISSN

    0094-1190

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