Title: Environmental Regulation and Firm Productivity: A Regression Discontinuity Design

Speaker: Assistant Professor Guojun He, Hong Kong University of Science and Technology 

Time: September 22th, 2017 13:30–15:00

Venue: Conference Room 106B, Zhonghui Building (College of Economics, JNU)

Abstract:
This paper estimates the causal effect of environmental regulation on firm productivity in a regression discontinuity design implicit in China’s surface water quality monitoring system. As water quality monitoring stations can only capture emissions from the upstream, local governments are incentivized to regulate firms in the near upstream of a monitoring station, but not in the near downstream, despite their spatial adjacency. Exploiting this spatial discontinuity in regulation stringency, we find that water quality monitoring reduces upstream polluting firms’ TFP by 26.7%. We estimate that a 10% abatement in COD emissions will lead to a 1.73%–2.42% loss in TFP.