|The motivation to implement environmental regulations is to increase environmental
quality, as well as to promote higher quality of life and health benefits, for
citizens. But how do environmental regulations affect labor demand in the regulated
industries? The aim of this thesis is to analyze the effect of two environmental
regulations imposed on the Norwegian primary aluminum industry on labor demand.
Moreover, we investigate the effect of a technological change originating from the
latter regulation on labor demand, being the shutdown of the more polluting and
less efficient production technology, the Søderberg anodes. In particular, we exploit
the introduction of an environmental agreement in 1997, and an increased stringency
in the industry’s emission permits in 2000, as exogenous sources of variation in labor
demand in the pertinent municipalities, by using a differences-in-differences strategy.
Furthermore, we instrument the latter regulation on the shutdown of the Søderberg
anodes. Using Norwegian municipality–level data, we find that the 97–agreement,
and the shutdown of the Søderberg anodes, are associated with a short–term increase
in the employment rate equivalent to respectively 135 and 406 jobs, in each of the
municipalities in Norway that encompass a primary aluminum production plant.