Cross-border environmental regulation and firm labor demand

Chakraborty, P. and Chakrabarti, A.S. and Chatterjee, C. (2023) Cross-border environmental regulation and firm labor demand. Journal of Environmental Economics and Management, 117: 102753. ISSN 0095-0696

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Abstract

In 1994, due to environmental concerns, Germany banned a chemical called ‘Azo-dyes’, a primary input for the leather and textiles firms in India (a key exporter). Exploiting this as a quasi-natural experiment, we examine the effects of this cross-border regulatory change on labor compensation, particularly managerial, for both Indian upstream (dye-producing) and downstream (leather and textile) firms. We find that the regulation increased compensation of managers by 1.3%–18% in dye-producing firms compared to other chemical firms. This is due to the combination of changes such as investing in R&D, product churning, import of high-quality intermediates, due to the ban, which led to this change in within-firm labor composition. This increase in overall compensation is driven only by fixed component (wages), consistent with the effects of a long-run shock. We find no such effects for downstream firms. We believe, our study is one of the first to show that just like tariff, non-tariff barriers (NTBs) can also significantly affect within-firm labor composition.

Item Type:

Journal Article

Journal or Publication Title:

Journal of Environmental Economics and Management

Additional Information:

This is the author’s version of a work that was accepted for publication in Journal of Environmental Economics and Management. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Environmental Economics and Management, 117, 2023 DOI: 10.1016/j.jeem.2022.102753

Uncontrolled Keywords:

/dk/atira/pure/subjectarea/asjc/2000/2002

Subjects:

?? cross-border environmental regulationdye-producing firmsmanagerial compensationnon-tariff barriersupstream and downstream sectors‘azo-dyes’economics and econometricsmanagement, monitoring, policy and law ??

Departments:

Lancaster University Management School > Economics

ID Code:

182020

Deposited By:

ep_importer_pure

Deposited On:

19 Dec 2022 13:50

Refereed?:

Yes

Published?:

Published

Last Modified:

28 Aug 2024 00:26

URI:

https://eprints.lancs.ac.uk/id/eprint/182020