Productivity, Export, and Environmental Performance: Air Pollutants in the United States

This paper studies the firm‐level relationship among productivity, decision to export, and environmental performance. The emerging theoretical and empirical literature suggests that trade has an important role in determining firms' heterogeneity: increased openness to trade induces a reallocation effect that increases within‐industry efficiency, thereby linking firms' decisions to export and adopt newer (and cleaner) technology. We argue that this framework provides the following empirically‐relevant predictions: there is an inverse relationship between firm productivity and pollution emissions per unit output; exporting firms have lower emissions per unit output; and larger firms have a lower emission intensity. To examine these implications empirically, we have assembled a uniquely detailed dataset of the U.S. manufacturing industry for the years 2002, 2005, and 2008 by matching facility‐level air emission data from the U.S. Environmental Protection Agency with the facility's economic characteristics contained in the National Establishment Time Series database. The strategy is to first estimate a facility‐level total factor productivity parameter as a plant‐specific fixed effect. We then investigate how this estimated productivity parameter correlates with emission intensity on a pollutant‐by‐pollutant basis. Our empirical findings support the hypotheses suggested by the conceptual model. For each criteria air pollutant considered, we find a significant negative correlation between estimated facility productivity and emission intensity. Conditional on a facility's estimated productivity and other controls, exporting facilities have significantly lower emissions per value of sales than non‐exporting facilities in the same industry. We also find that plant size is negatively and significantly related to emission intensity for all pollutants.

Duke Scholars

Author Jingbo Cui DKU Faculty