Air pollution emitted from firms and industries in the United States poses a significant threat to human health and the environment. Economists have traditionally opposed environmental regulations based on the argument that regulations reduce economic growth. Some scholars, however, have argued that polluting firms often adjust to environmental regulations through technological innovations that have the opposite effect. This study examines the effects of environmental regulations on economic growth through a case study of the metal finishing industry in the South Coast Basin of Southern California. The industry in the Basin has been regulated since 1988 by the South Coast Air Quality Management District (AQMD) as a result of the industry’s use of hexavalent chromium. Based on a comparative analysis of the metal finishing industries in Chicago and Detroit, it appears that the AQMD regulations have not had a detrimental impact on the growth of the industry in the Basin.

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The unemployment problems of blacks in the United States have been the subject of considerable research in the social sciences since the 1980s. One way of studying the barriers to employment faced by blacks has been to interview employers, face to face, and directly ask them about their racial attitudes. These studies have concluded that a majority of employers believe that blacks, compared with other racial and ethnic groups, are uncooperative, unreliable, and lack sufficient skills for entry‐level employment. The present study critically reexamines employer racial attitudes toward blacks and other groups through a case study of employer hiring in the electronics industry in Los Angeles. Using a different set of interview questions, employers reported (1) that blacks are reluctant to accept unskilled jobs due to a higher reservation wage, not because they lacked skills or a work ethic, (2) that employer racial attitudes varied by level of occupational skill, and (3) that affirmative action regulations modified the hiring process such that employers were less likely to rely on negative racial stereotypes in their hiring and more likely to rely on objective criteria when screening job seekers. I conclude by suggesting that employer racial attitudes are dynamic and, in large measure, shaped by institutional relationships within the workplace.

Since the 1960s, environmental regulations have played an increasingly large role in regulating the activities of private businesses that generate pollution. There has been little research, however, on the effects of environmental regulations on the location decisions of firms and industries. This article attempts to bridge this gap by examining the impact of air pollution regulations implemented by the South Coast Air Quality Management District in 1988 on the wood household furniture industry in southern California. The regulations created a great deal of uncertainty within the industry. Some firms relocated to Mexico to avoid compliance. Other firms remained in the region and attempted to adjust through product and process innovations. Over time, and with the help of institutions, the industry adjusted through a process of “learning by doing.” A challenge for community economic development practitioners is to build institutions that foster the learning process by which firms adjust to environmental regulations.