Boon or bane? On productivity and environmental regulation

Abstract

As climate change has gained more attention in the last decade, effects of environmental regulation on productivity are important to design green tax reforms. This study examines the impacts of environmental taxes and spillovers on technical efficiency, using data on Central European manufacturing firms, from 2009 to 2017. The results highlight strong effects of environmental taxation on productivity. Besides, downstream energy taxation does not affect productivity, while upstream taxes decrease technical efficiency. Downstream pollution taxation decreases productivity, whereas upstream taxation spurs technical efficiency. This study contributes to the literature by investigating heterogeneous tax effects across industries, involving tax spillovers and considering endogeneity issues.

Economic prosperity, asymmetric natural resource income, and ecological demands in resource-reliant economies

“…Aziz et al (2021) used the PMG, DOLS, FE and pooled OLS to infer that strict environmental policies adversely impacted economic prosperity in the short term but are a blessing in the long term. Steinbrunner (2021) found environmental tax to have significantly and positively impacted the productivity of manufacturing firms in Central Europe. Usman et al (2021) applied the AMG and D-H causality to derive a bidirectional nexus between economic growth and environmental quality in the 15 highest emitting countries.…”

Spatial Spillover Effect of Pollution under Heterogeneous Environmental Regulations in the Perspective of Hidden Economy

“…With the "constraint hypothesis", Huang and Ma [9] used the variable coefficient and mediating effects models to find that environmental regulations in growing resource cities were not conducive to technological upgrading. Some scholars based on the "Porter hypothesis" have argued that strong environmental regulation could improve their market competitiveness by promoting enterprises' technological innovation while reducing environmental damage [10][11][12]. However, Sinn [13] presented the 'green paradox', arguing that severe environmental regulation under certain conditions does not promote environmental protection.…”

The Impact of Environmental Management on Labour Productivity

“…The well-known Porter hypothesis [21] suggests that environmental regulation stimulates firms to engage in innovative activities, which should enhance their competitiveness and productivity [22]. Energy taxes usually represent the largest share of total environmental taxes.…”

“…Empirical evidence regarding the Porter hypothesis points to sector-specific effects. In this respect, Steinbrunner [22] reports that energy and pollution tax rates positively affect productivity in energy-intensive sectors, industries producing energy-consuming goods, and polluting sectors. Furthermore, Fujii et al [24] find that energy conservation laws have raised productivity in the metals and machinery sectors.…”