A new paper on the labor market impacts of cap and trade for NOx (a good program, by the way):
Who Loses Under Power Plant Cap-and-Trade Programs? by Mark Curtis
This paper tests how a major cap-and-trade program, known as the NOx Budget Trading Program (NBP), impacted labor markets in the regions
where it was implemented. The cap-and-trade program dramatically decreased levels of NOx emissions and added substantial costs to
energy producers. Using a triple-differences approach that takes advantage of the geographic and time variation of the program as well
as variation in industry energy-intensity levels, I examine how employment dynamics changed in manufacturing industries whose
production process requires high levels of energy. After accounting for a variety of flexible state, county and industry trends, I find
that employment in the manufacturing sector dropped by 1.3% as a result of the NBP. Young workers experienced the largest employment
declines and earnings of newly hired workers fell after the regulation began. Employment declines are shown to have occurred
primarily through decreased hiring rates rather than increased separation rates, thus mitigating the impact on incumbent workers.
Parenthetically, WC makes a good point about NO2, assuming it is not pushed to the Nth degree. Nitrous oxide is much worse than seltzer water.
It is not surprising that as the cost of production goes up in any business, including one that is energy-intensive, that one tries to reduce cost wherever possible, even where labor is a small fraction of the total. To survive and prosper, especially if one is hungry and facing annihilation, one looks to reduce cost wherever possible. In a refinery, one might look everywhere, first not in the maintenance department, but elsewhere, as in cutting Vice Presidents, extra people in the shipping department, and yes, idle or mostly idle hourly workers. In a steel mill it is one’s obligation not just to the stockholders, who are ignored, but also to the company to get rid of unproductive employees to keep the company profitable and able to continue to pay the remainder, all of whom might be unemployed, seeking rents from the government, creating much bigger problems.
So whever one saves, another window is unbroken, and what is unseen is that wasted resources go to creating a job for a useful purpose. I know I just begged the question by using “useful”, but we can discuss that further, assuming anyone has interest.
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