Environmental protection and economic growth: What do the residuals tell us?

Conventional wisdom implies economic growth and environmental quality are i ncompatible policy objectives. Recent empirical evidence, however, suggests stringency of environmental regulations are only weakly (or not at all) as sociated with decreased manufacturing activity. This paper uses more recent (1982-1994) state-level panel data to rest if environmental regulations af fect manufacturing employment. Estimation results from our three-stage samp le selection panel data model suggest that state environmental regulations adversely affect job growth in three of the four industries analyzed.