Does regulating greenhouse gas emissions lead to outsourcing? An empirical study of the pollution haven theory.

摘要

A common concern with enacting new environmental regulations is that firms could move overseas to avoid compliance costs, resulting in domestic job loss and ultimately no net reductions in pollution. These fears have remained relevant to the current movement to regulate greenhouse gas (GHG) emissions, and have been a primary factor for the US. hesitation to commit to international or national-level regulations to combat climate change. Therefore, this study examines if regulating GHG emissions has led to any significant outsourcing behaviors, using panel data from 1985-2009 to track countries that ratified the Kyoto Protocol and also participated in the European cap and trade program (EU ETS). This study utilizes a uniquely constructed dataset from the OECD International Direct Investment Statistics database, EIA International Energy Statistics, World Bank World Development Indicators, and CEPII data, among other sources. It is also unique in using NASA global temperatures data as an instrumental variable to counter endogeneity in adopting GHG regulations. In the three-way fixed effects and 2SLS models, GHG regulations were not found to be statistically significant predictors of outsourcing at the 0.05 level. Instead, factors such as geography and past FDI levels were found to be much stronger motivators of firm location decisions. Therefore, policymakers should work to better communicate that GHG regulations are unlikely to cause job loss from outsourcing, and also critically examine policies such as carbon tariffs.