Pollution Abatement Costs and Labor Demand in Korea Manufacturing Industries

제조업의 환경오염방지지출과 노동수요

  • 황석준 (한국환경정책.평가연구원) ;
  • 강만옥 (한국환경정책.평가연구원)
  • Published : 2005.12.30


In this study, we try to find out the effect of private companies' environmental protection activities on the labor demand of companies in Korea manufacturing industries with empirical practice from 1992 to 2002. One of the main difficulties in this empirical work is to identify the effect of environmental protection activities on the labor demand, because the effect can be mixed with the effect of traditional production technologies on the labor demand. We follow the suggestion of Morgenstern et al. (2002) to identify the effect but which is not enough because of endogeneity between the production technology improvement and pollution reduction. So we propose a Fixed-effect Instrumental Variable estimation method as an estimation strategy. The estimation results support the positive relationship between the labor demand increase and the increase in pollution abatement costs. Therefore, we can conclude that the environmental protection activites of Korea manufacturing industries from 1992 to 2002 can help job creation without making a big burden for business activities when we consider the share of pollution abatement costs among total production costs is around 1% during that time.