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Evaluating “Cash-for-Clunkers”: Program Effect on Auto Sales, Jobs, and the Environment

Shanjun Li (), Joshua Linn () and Elisheba Spiller

Discussion Papers from Resources For the Future

Abstract: We investigate the effects of “Cash for Clunkers”, a $3 billion economic stimulus program, on new vehicle sales, employment, gasoline consumption, and the environment. Using Canada as the control group in a difference-in-differences framework, we find that the program increased new vehicle sales by about 0.39 million during July and August of 2009, while the net increase reduced to 0.25 million from June to December. The difference suggests that, as intended, the program significantly shifted sales to July and August from other months. Nevertheless, the program would result in only 8.58 to 28.28 million tons of CO2 emission reductions, implying a cost per ton ranging from $91 to $301 even after accounting for the benefit of the program in reducing criteria pollutants. In addition, the program is estimated to have created 3,676 job-years in the auto assembly and parts industries from June to December of 2009. That effect decreased to 2,050 by May 2010.

Keywords: CARS program; automobiles; employment; gasoline consumption; carbon dioxide emissions (search for similar items in EconPapers)
JEL-codes: L62 Q5 (search for similar items in EconPapers)
Date: 2010-08-04
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