The Role of Regulations in the Development of Labor Market Power: Evidence from Clean Air Act’s New Source Review Permit Program
This project will examine whether regulations increase firms’ labor market power and how changes in labor market structure vis-à-vis regulation affect worker outcomes. Some laws limit how much existing firms must comply with new regulations, while new firms must comply. One example is the Environmental Protection Agency’s New Source Review permitting requirements. The research team seeks to understand how this regulation affects employers’ labor market power. They will use data from the U.S. Census Bureau to link individual earnings with demographic and geographic information. Further, they will use data on counties and industries from the EPA to conduct a difference-in-difference analysis and a two-stage instrumental strategy to estimate the effect of regulation on local labor concentration and worker outcomes. This research will broadly inform regulatory design with worker outcomes in mind.