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Exporting and Pollution Abatement Expenditure: Evidence from Firm-Level Data

Soumendra N. Banerjee, Jayjit Roy () and Mahmut Yasar

No 19-10, Working Papers from Department of Economics, Appalachian State University

Abstract: The relevance of analyzing whether exporting rms engage in greater pollution abatement cannot be overemphasized. For instance, the question relates to the possibility of export promotion policies being environmentally benecial. In fact, the issue is especially relevant for developing countries typically characterized by ine/ective environmental regulation. However, despite the signicance of the topic, the extant literature examining the environmental consequences of rm-level trade is skewed toward developed countries. Moreover, the existing contributions rarely attend to concerns over non-random selection into exporting. Accordingly, we employ cross-sectional data across Indonesian rms as well as a number of novel identication strategies to assess the causal e/ect of exporting on abatement behavior. Two of the approaches are proposed by Millimet and Tchernis (2013), and entail either minimizing or correcting for endogeneity bias. The remaining methods, attributable to Lewbel (2012) and Klein and Vella (2009), rely on higher moments of the data to obtain exclusion restrictions. While we largely nd exporting to encourage pollution abatement, the estimated impacts are more pronounced after accounting for selection into exporting. Key Words: Exporting, Environment, Pollution Abatement, Instrumental Variables, Treatment Efects

JEL-codes: C26 F18 F23 Q4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env, nep-int and nep-sea
Date: 2019
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