환경정책과 고용 I

Abstract

The debate about the effect of the environmental policy on employment has been continued for a long time. While the agreement of the debate still is not reached, the majority believes that, at least, the environmental policy is not against employment. Recent OECD study "Environment and Employment: An Assessment(2004)" supports the above idea by indicating such three points as i) "environmentally-related activities in the private, public and tertiary sector have become a significant source of employment in a number of OECD Member countries," ii) "the employment double dividend remains uncertain and small (positive effect)," iii) "when looking at the short term and sectoral level, the effects of environmental policy on employment may be substantial." In this research, we try to find out the path of the effect of environmental policy to the labor demand of companies in Korea manufacture industries with empirical practice. The baseline of this practice is as follows; in decision making process, the companies do not consider the effect of their production behavior on environment, since the environment is treated as "public good." To force them into including the environment in their decision making process, the government must regulate their behaviors with the implementation of environmental policy. When the companies comply with the rules of the government, they make additional payments, which are called pollution abatement costs. The introduction of a new burden, pollution abatement cost, may limit the companies' capacity of hiring workers and reduce labor demand or may transfer, sometimes create, labor demand from the traditional sectors to the new sectors which are necessary to meet the level of environmental regulation. And we set up the estimation process based on this logic and check the existence of the path. Pollution abatement costs by industries in manufacture, which are collected by the Bank of Korea, are used in the estimation. In this data set, manufactures are categorized by 10 industries; food？beverage, textile？clothings？leathers, lumber products, paper？printing, oil？chemical？rubber, non-metallic products, basic metals, fabricated metals？machinery equipment, vehicle？other transportation equipment, other manufactures. Such data as employment, production by industries are collected from the National Statistical Office (or KOSIS). As policy variables, we use i) the number of air pollution inspect per a company, which represents the level of monitoring, ii) the budget share of ministry of environment which is used for the ministry to manage pollutants directly, iii) Herfindahl index which measures the intensity of concentration by industries. The source data of the above data set is available from the Ministry of Environment and the National Statistical Office. We cover ten years from 1992 to 2002 to estimate the effect of the environment policy on employment by industries. Random effect IV estimation is used. As explained before, we set up the model as two stage process. At first stage, the intensity of environmental policy which is represented by three policy variables affects the decision of how much expenses are made to comply with the policy by the companies. And second, given the level of policy and expenses, labor demand is decided. IV estimation technique is one of appropriate methods to estimate. We use Balestra and Varadharajan-Krishnakumar estimator. We can find positive and negative paths from the estimation. The positive path means that both the environment-protection activities and the labor demand of companies are increased together. The negative one means that the increase of environment-protection activities decreases the labor demand of companies. The positive path to the employment increase comes from i) the need for workers for environment-protection activities ii) the company's enlarged capacity of hiring workers due to cost-saving from the positive agglomeration effects. The negative one comes from the burden of extra cost which is levied by regulations. Therefore, the net effect of environment policy on employment depends on the amount of two effects. So the job creation capacity of the environmental policy can be limited in the long run, as OECD (2004) reports. One of the best ways to amplify the job creation capacity of the environmental policy is to support directly the environment-industry and the new renewable energy industry. The environment-industry has the characteristics of intermediate industry, which means that the spread effect of the industry on the other industry is ranked relatively higher than that of other industries in manufacture. When we consider the expansion of environment industry market, we can expect 260 thousand job creation at 2005. In the case of renewable energy industry, we can confirm the positive job creation capacities from case studies in foreign countries. These evidences suggest that the support of environmental friendly industry is the best way to both protecting environment and increasing labor demand at the same time. Based on this analysis, we can find policy implications as follows; in view of environmental policy, first, it is good for the government to support labor-intensive pollution abatement technique for increasing labor demand. But this policy direction can be quite limited in efficiency point of view. Second, the government needs to strengthen the monitoring. Sometimes people misunderstand that the release of monitoring and the pursue of market-based environmental policy are same. But the truth is that the success of market-based environmental policy relies upon the accuracy of monitoring. Furthermore, as our estimation result shows, the strengthen of monitoring gives the incentive for companies to invest for the environment protection activities and finally increase the labor demand. Third, the support for the environmental friendly good consumption can also increase the labor demand (because the consumption drives the labor demand in new sector) and environment protection. In view of industry policy, first, it is best way for the government to support the environment-industry and renewable energy industry. As we mentioned above, the environment-industry is growing world widely and the intermediate characteristics of environment-industry is appropriate for boosting labor market. In the case of renewable energy there exists powerful effect of labor demand because of import substitution effect of energy. Second, the strengthen of agglomeration effect is required to enhance labor demand, especially for the small-medium companies. The acquisition of scale economy is one of the best cost-saving ways. When there are many small companies, it is difficult for them to agglomerate by themselves because of many reasons. So it is needed for the government to help them organized. By doing so, they can achieve scale economy in environment- protection activities and increase the capacity of job creation with cost-savings. In view of public investment, to increase labor demand and protect environment, it is more efficient for the government to invest social capital which can improve the quality of life in a community. Because, the social capital investment for saving the cost of environment protection activities in business sector can diminish the incentive of companies for keeping environment clean, the direction of social capital investment must be residential environment sector. If the social capital increase in residential areas can improve the quality of life in those areas, then the areas are attractive for people to reside in and the search cost for company to find out necessary workers is relatively low. Therefore, it is likely for company to increase the capacity of hiring. On the top of that, public investment itself increases labor demand directly. In this research, we have some major limitation. The main limitation is that this study is a partial equilibrium approach. Generally, the effect of one policy can affect every behavior of economic agents through several substitution. To capture those whole phenomena, general equilibrium approach is required. Unfortunately, we do not have fully considered general equilibrium model to simulate the policy effect. So it is necessary to develope the general equilibrium model soon. The limitation of data is critical every moment. Especially, there is no consistent classification of industry for whole variables. This can lead the biased estimation results. These whole weakness must be overcome to get concrete results. Finally, in this practice, we do not cover the industry sector like service. When we remind the fast growing speed of service sector and its job creation capacity, the analysis for service sector is required.