nep-res New Economics Papers
on Resource Economics
Issue of 2023‒01‒02
two papers chosen by
Maximo Rossi
Universidad de la República

  1. Cap-and-Innovate: Evidence of regulation-induced innovation in California By Vanessa da Cruz
  2. The impact of air pollution on labour productivity in France By Clara Kögel

  1. By: Vanessa da Cruz (CER-ETH Centre of Economic Research at ETH Zurich, Switzerland)
    Abstract: The paper applies the synthetic control method to examine the effects of California’s Cap-and-Trade Program on environmental innovation. The analysis exploits the International Patent Classification system to identify patents relating to environmentally sound technologies. This enables the study to focus on the effects of the policy intervention on green patent filings. A counterfactual is constructed by the combination of other states in the US which allows the comparison of patent applications in California to the estimated counterfactual situation in the absence of a Cap-and-Trade program. The study finds that the number of patents related to green technologies increased by approximately 22.5% after the passing of the Cap-and-Trade regulation. This result is robust to alternative specifications of the synthetic control method.
    Keywords: Induced Innovation, Environmental Policy, Climate Change, California Cap-and-Trade Program
    JEL: Q55 Q58 O31 O38
    Date: 2022–12
  2. By: Clara Kögel (Université Paris 1 Panthéon Sorbonne – Centre d'Économie de la Sorbonne, Organisation de Coopération et de Développement Économiques (OCDE) – Directorate for Science, Technology and Industry (STI))
    Abstract: This paper investigates the effect of air pollution on labour productivity in French establishments in both manufacturing and non-financial market services sectors from 2001 to 2018. An instrumental variable approach based on planetary boundary layer height and wind speed allows identifying the causal effect of air pollution on labour productivity. The finding shows that a 10% increase in fine particulate matter leads, on average, to a 1.5% decrease in labour productivity, controlling for firm-specific characteristics and other confounding factors. The analysis also considers different dimensions of heterogeneity driving this adverse effect. The negative impact of pollution is mainly driven by service-intensive firms and sectors with a high share of highly skilled workers. This finding is in line with the expectation that air pollution affects cognitive skills, concentration, headache, and fatigue in non-routine cognitive tasks. Compared to the marginal abatement cost of PM 2.5 reductions by the Air Quality Directive 2008/50/EC, the estimated gains only from the labour productivity channel could largely offset the abatement cost. All in all, these estimates suggest that the negative impact of air pollution is much larger than previously documented in the literature.
    Keywords: Air pollution, Labour productivity, Planetary boundary layer height,
    JEL: J24 O13 Q53 Q51 Q52
    Date: 2022–12

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