Does Regulation Kill Jobs?

Does Regulation Kill Jobs?

Cary Coglianese
Adam M. Finkel
Christopher Carrigan
Copyright Date: 2013
Pages: 312
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  • Book Info
    Does Regulation Kill Jobs?
    Book Description:

    As millions of Americans struggle to find work in the wake of the Great Recession, politicians from both parties look to regulation in search of an economic cure. Some claim that burdensome regulations undermine private sector competitiveness and job growth, while others argue that tough new regulations actually create jobs at the same time that they provide other benefits.Does Regulation Kill Jobs?reveals the complex reality of regulation that supports neither partisan view. Leading legal scholars, economists, political scientists, and policy analysts show that individual regulations can at times induce employment shifts across firms, sectors, and regions-but regulation overall is neither a prime job killer nor a key job creator. The challenge for policymakers is to look carefully at individual regulatory proposals to discern any job shifting they may cause and then to make regulatory decisions sensitive to anticipated employment effects. Drawing on their analyses, contributors recommend methods for obtaining better estimates of job impacts when evaluating regulatory costs and benefits. They also assess possible ways of reforming regulatory institutions and processes to take better account of employment effects in policy decision-making.Does Regulation Kills Jobs?tackles what has become a heated partisan issue with exactly the kind of careful analysis policymakers need in order to make better policy decisions, providing insights that will benefit both politicians and citizens who seek economic growth as well as the protection of public health and safety, financial security, environmental sustainability, and other civic goals.Contributors:Matthew D. Adler, Joseph E. Aldy, Christopher Carrigan, Cary Coglianese, E. Donald Elliott, Rolf Färe, Ann Ferris, Adam M. Finkel, Wayne B. Gray, Shawna Grosskopf, Michael A. Livermore, Brian F. Mannix, Jonathan S. Masur, Al McGartland, Richard Morgenstern, Carl A. Pasurka, Jr., William A. Pizer, Eric A. Posner, Lisa A. Robinson, Jason A. Schwartz, Ronald J. Shadbegian, Stuart Shapiro.

    eISBN: 978-0-8122-0924-2
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-viii)
    Cary Coglianese
  4. Chapter 1 The Jobs and Regulation Debate
    (pp. 1-30)
    Cary Coglianese and Christopher Carrigan

    The Great Recession wreaked havoc on employment in the United States. Even as the overall economy officially began to pick up by the middle of 2009, the American labor force still struggled to rebound. Month after month, millions of workers lost their jobs and millions more continued to look for new full-time work. Politicians responded to this great economic crisis by, among other things, blaming regulation (Coglianese 2012a). Some blamed the lack of adequate regulation for triggering the economic collapse in the first place, while others blamed regulation and its attendant burdens for hampering the pace of recovery. For those...

  5. Evidence
    • Chapter 2 Analyzing the Employment Impacts of Regulation
      (pp. 33-50)
      Richard D. Morgenstern

      Prior to the current economic downturn, neither the creation nor the destruction of jobs was a major concern about the effects of regulation. In contrast, the term “job-killing regulations” has now become a rallying cry for regulatory opponents, just as the exaggerated claims of job creation have been embraced by regulatory advocates. The continuing high national unemployment rate has clearly amped up public debate on this issue and, correspondingly, the potential value of considering job impacts in Regulatory Impact Analyses (RIAs).

      Empirical assessment of the employment impacts of regulations is, in fact, a challenging task, due to data limitations as...

    • Chapter 3 Do the Job Effects of Regulation Differ with the Competitive Environment?
      (pp. 51-69)
      Wayne B. Gray and Ronald J. Shadbegian

      Prior to 1970, environmental regulation was primarily the responsibility of state and local agencies—for the most part with limited enforcement activity. After the formation of the U.S. Environmental Protection Agency (EPA) in the early 1970s and the passage of the Clean Air Act and Clean Water Act, the federal government replaced state and local agencies by taking over the lead role in regulating environmental quality, imposing more stringent regulations with correspondingly greater levels of enforcement. Since that time, the federal government has continually promulgated rules requiring U.S. manufacturing facilities to further decrease their emission levels. This increasing stringency of...

    • Chapter 4 The Employment and Competitiveness Impacts of Power-Sector Regulations
      (pp. 70-88)
      Joseph E. Aldy and William A. Pizer

      In the debate over environmental regulations, a principal concern is the potential impact on employment in the more energy-intensive U.S. manufacturing industries. Although the academic literature and agency practice in regulatory impact analyses have estimated the direct effect of manufacturing-sector environmental regulations on employment, these literatures have been largely silent on the indirect effects of power-sector environmental regulations (the exception being general equilibrium analyses of power-sector policies; Rausch and Mowers 2012). Yet the extensive array of power-sector regulations on the horizon could increase electricity rates manufacturing firms face. This would increase domestic production costs, and eventually prices charged to customers...

    • Chapter 5 Environmental Regulatory Rigidity and Employment in the Electric Power Sector
      (pp. 89-108)
      Rolf Färe, Shawna Grosskopf, Carl A. Pasurka Jr. and Ronald J. Shadbegian

      In recent decades, there has been recurring interest in the extent to which implementing environmental regulations to reduce bad outputs (for example, sulfur dioxide, or SO₂ emissions) adversely affects the ability of an economy to produce its marketed good outputs (see Pasurka 2008). This concern has emerged because with a fixed technology and fixed inputs (for example, labor and capital), reductions in bad outputs are achieved at the cost of reduced production of good outputs (for example, electricity generation). A recent variation of this topic asks about the effect of environmental regulations on employment.

      When a government implements a tariff...

  6. Analytics
    • Chapter 6 Toward Best Practices: Assessing the Effects of Regulation on Employment
      (pp. 111-127)
      Lisa A. Robinson

      A poorly performing economy, accompanied by congressional proposals to curb regulation and new research on regulation’s effects on employment, has led to increased interest in incorporating employment impacts into regulatory analysis. Both the extent to which such impacts are estimated and the approaches used to estimate them vary greatly due in part to a lack of consensus on how to best conduct such assessments.¹ As a result, there is a growing need to develop analytic approaches that are consistent with a welfare economics framework, reflect well-conducted empirical research, and meet the information needs of policymakers and other stakeholders. Such “best...

    • Chapter 7 Emitting More Light than Heat: Lessons from Risk Assessment Controversies for the “Job-Killing Regulations” Debate
      (pp. 128-149)
      Adam M. Finkel

      Although we can choose to think descriptively, quantitatively, or both when we evaluate the pros and cons of whether and how to attack a hazard to health, safety, or the environment, both political leaders and the public increasingly expect that numbers will play a central role. And not just any numbers will do. As our faculties for collecting data, discerning causal relationships, and refining empirical models continue to improve, regulatory analysts are struggling to provide “high-quality quantification.” Those responsible for developing, supporting, or criticizing estimates of regulatory costs in general, and of the effects of regulation on jobs in particular,...

    • Chapter 8 Happiness, Health, and Leisure: Valuing the Nonconsumption Impacts of Unemployment
      (pp. 150-169)
      Matthew D. Adler

      The income effects of unemployment have been much studied (Davis and von Wachter 2011). Reduced income, in turn, means reduced consumption: the value (at market prices) of the goods and services that an individual purchases and utilizes. However, it is clear that unemployment also has substantial nonconsumption effects. First, unemployment increases leisure—a benefit (Krueger and Mueller 2012). But unemployment can have significant nonconsumption effects beyond changes to leisure—in particular, effects on psychological well-being and physical health. Some of the correlation between unemployment and poor psychological or physical health may be due to the fact that these conditions reduce...

    • Chapter 9 A Research Agenda for Improving the Treatment of Employment Impacts in Regulatory Impact Analysis
      (pp. 170-189)
      Ann E. Ferris and Al McGartland

      Benefit–cost analysis (BCA) is one of the dominant paradigms for evaluating regulatory decisions. In 2011, President Obama reaffi rmed BCA’s role with Executive Order 13563 (Obama 2012). Not surprisingly, new political appointees and other se nior policy officials are always anxious to learn about BCA and how economists conduct it. If economists are the ones “scoring” policy proposals, decision makers naturally want to understand the methods for assessing benefits and costs. Some are surprised to learn that economists have a well-defined conceptual underpinning to BCA, dating back 75 years (Hicks 1940; Kaldor 1939). They do not change the conceptual...

    • Chapter 10 Employment and Human Welfare: Why Does Benefit–Cost Analysis Seem Blind to Job Impacts?
      (pp. 190-204)
      Brian F. Mannix

      When economists perform a benefit–cost analysis (BCA) of a public project or policy, they think of it as summarizing the real effects of the decision on public welfare: the well-being of real people, measured according to people’s own preferences. The methods they use are specifically designed to look past the familiar aggregate statistics of economic activity—the national income, gross domestic product (GDP), and so forth—to isolate net changes in economic surplus, which is a dollar-denominated aggregate estimate of how much better or worse off individual consumers can be expected to feel. After all, economic activity itself has...

  7. Reform
    • Chapter 11 Unemployment and Regulatory Policy
      (pp. 207-222)
      Jonathan S. Masur and Eric A. Posner

      Unemployment is generally thought to be a problem that is best addressed with fiscal and monetary policy, not with regulations. But regulatory agencies have long tried to calculate and respond to the possible unemployment effects of regulations. Some statutes require agencies to use so-called feasibility analysis, according to which the agencies should regulate up until there is significant job loss (Masur and Posner 2010). Even when statutes do not contain this requirement, the Obama administration has asked agencies to conduct “job loss” analysis, under which agencies estimate the unemployment effects of proposed regulations and disregard regulations that would cause excessive...

    • Chapter 12 Reforming the Regulatory Process to Consider Employment and Other Macroeconomic Factors
      (pp. 223-238)
      Stuart Shapiro

      The issue of unemployment is never far off of the national radar. During the Great Recession, it was at the forefront of policy debates, with both parties claiming unique solutions to lingering high unemployment rates. In the past few years, the role of regulation has also become central in the debate over jobs—and jobs have become central in the debate over regulation. Whereas the rhetoric used to oppose new regulations had earlier focused on costs, since the onset of the Great Recession oppositional rhetoric has increasingly focused on employment (Livermore et al. 2012). Every Republican presidential contender in the...

    • Chapter 13 Analysis to Inform Public Discourse on Jobs and Regulation
      (pp. 239-255)
      Michael A. Livermore and Jason A. Schwartz

      Despite the fact that job impact analysis poses steep challenges and is unlikely to substantially alter most regulatory choices, there are good reasons to integrate employment effects into cost–benefit analysis of federal rule makings. Cost– benefit analysis not only offers government decision makers a technocratic tool to identify effi cient policies; it also informs public debate about the social effects of regulation. This broader deliberative purpose justifies committing federal agencies’ analytical resources to investigate employment effects.

      Cost–benefit analysis is often a complex and time-consuming task: it can involve engineering studies and technology forecasts, detailed scientific models and dose-response...

    • Chapter 14 Rationing Analysis of Job Losses and Gains: An Exercise in Domestic Comparative Law
      (pp. 256-272)
      E. Donald Elliott

      The issue of whether to quantify, monetize, and include the job losses (or gains) in the benefit–cost analysis conducted prior to adopting major rules is hardly unique in American law. Many analogous situations exist in which a policymaker must decide in advance of conducting an analysis which factors to include and which to leave out. This is called “scoping,” and the American legal system has experience with it in the regulations created by the Council on Environmental Quality (CEQ) to implement the National Environmental Policy Act (NEPA), as well as in scientific risk assessments.

      I call the pro cess...

  8. Contributors
    (pp. 273-278)
  9. Index
    (pp. 279-288)
  10. Acknowledgments
    (pp. 289-290)