Interactions between economic growth and environmental quality in US counties

Linkages among changes in employment, earnings per worker, and pollution per square mile are estimated for 3,036 U.S. counties for the period 1987 to 1995 using a three-equation disequilibrium adjustment model. Counties with higher shares of African-Americans experienced higher earnings growth rates over the period 1987-1995, as did counties with proportionally more females. Counties in states with higher shares of unionized workers had higher earnings growth rates but generated fewer new jobs. Firm size had a significant and negative effect on earnings growth while higher costs of living were associated with higher earnings growth. Also, metro counties and counties in the Northeastern U.S. experienced higher earnings growth than their non-metro counterparts and counties in other geographic regions. Statistically, faster job growth was found to accelerate the rate of earnings growth per worker. The authors conclude that counties concerned with job growth should recruit or attempt to spawn the creation of larger firms, recognizing that for some firms such a strategy may come at the cost of more rapid increases in pollution. Counties concerned with increasing the rate of growth in per worker earnings should instead focus on the creation of smaller firms.