The Missing Pollution Haven Effect:
Examining Some Common Explanations

Abstract

This paper examines the effect of recent increases in hazardous waste disposal taxes on employment growth in industries that generate hazardous waste. Most existing literature has found that interjurisdictional differences in environmental stringency have negligible measurable economic consequences. Common explanations for this lack of effect include claims that (1) measures of environmental stringency are poorly quantified, (2) compliance costs are modest, (3) variation in compliance costs among jurisdictions is small, and (4) cross-section data are insufficient to explore the consequences of increasingly stringent standards. This paper addresses these four concerns by quantifying hazardous waste disposal taxes, demonstrating that they are large and varied across jurisdictions in the United States, and showing that they have had a significant effect on hazardous waste management. The paper then uses a panel of state and county-level data to show that despite these findings, state hazardous waste disposal taxes do not impose large employment losses on industries that generate waste.

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