Article by Ishita Gupta
With climate change becoming an increasingly urgent issue, the push for stricter environmental regulations and a transition to renewable energy sources has gained momentum. At the same time, this shift also raises a critical question: Is there an unavoidable trade-off between reducing emissions and safeguarding jobs? Opponents of climate legislation often argue that stringent environmental policies could stifle economic growth and limit job creation. In an investigation of plant-level employment and emissions data in California, we find a direct, positive relationship between emissions and employment, suggesting environmental improvement does come at the cost of jobs.
Our analysis uses panel data on plant-level employment from the National Establishment Time-Series (NETS) and pairs it with local emissions data from the California Air Resources Board (CARB) measured in metric tons of CO₂ equivalent (CO₂e). CO₂e captures the total greenhouse gas emissions from industrial activities, standardizing the impact of different gases based on their global warming potential. This measure is widely used in climate policy as it reflects the cumulative environmental impact of emissions, making it a relevant metric for assessing the relationship between economic activity and environmental regulation.
A pooled cross-sectional regression shows a modest but statistically significant relationship between employment and emissions, with each data point representing one zip code for one year. The scatterplot illustrates this relationship, though pooling data across locations and time periods may obscure region-specific variations. To address this, we incorporate zip code fixed effects in our regression analysis to isolate intertemporal changes within individual areas. While urban areas naturally exhibit higher emissions and employment due to industrial density and infrastructure, rural areas experience distinct dynamics. The analysis isolates intertemporal changes within individual areas. The results of these regressions show that there is a clear relationship.
This regression shows that for every one-unit increase in the natural logarithm of employment (log_emp), there is an associated 0.273557 increase in the natural logarithm of emissions (log_emissions). This suggests a positive relationship between plant-level employment and emissions within the zipcode. In other words, as employment rises within a facility, locally measured emissions tend to increase as well, likely reflecting the greater output and resource usage that accompanies higher labor demands.
While environmental regulations aim to cut emissions, our findings suggest they may unintentionally affect local employment. Fossil fuel–reliant industries often serve as key employers, particularly in regions with limited alternative job opportunities. Policymakers must consider these potential job impacts when crafting emission reduction strategies.
This relationship is a quantification of the short-run relationship that characterizes the present and recent past, which shows that increased economic activity produces pollution. The goal of investment in clean energy, clean industry, and clean transportation is to lessen this tradeoff so that increases in economic activity carry a lighter burden of atmospheric pollution.
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Article by Ishita Gupta ’27 Data Journalist |
 
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