The Effect of Environmental Protection Expenditures on Industrial Employment in Sweden

Golnaz Amjadi, Moriah Bostian, Hanna Lindström (), Tommy Lundgren and Mattias Vesterberg
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Golnaz Amjadi: Umeå University and Swedish University of Agricultural Sciences
Moriah Bostian: Umeå University and Swedish University of Agricultural Sciences
Hanna Lindström: Umeå University and Swedish University of Agricultural Sciences
Tommy Lundgren: Umeå University and Swedish University of Agricultural Sciences
Mattias Vesterberg: Umeå University and Swedish University of Agricultural Sciences

Environmental & Resource Economics, 2025, vol. 88, issue 4, No 7, 1110 pages

Abstract: Abstract In this paper, we empirically investigate how environmental protection expenditures affect sector-level employment within manufacturing industries, using detailed firm-level data for Sweden for the years 2002–2021. We use a structural model that allows for a decomposition of the total employment effect of environmental protection expenditures within a sector into a cost effect, a factor shift effect, and a demand effect. We add to previous literature by using instrumental variables in our empirical framework, to account for endogenous environmental spending stemming from, e.g., corporate social responsibility and self-regulation. Our results reveal that increased environmental protection expenditures generally have no statistically significant effect on employment among the sectors studied, with the paper and pulp sector being the exception, showing non-negligible negative effects on employment.

Keywords: Environmental protection; Labor demand; Environmental regulation (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10640-025-00961-7

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