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Environment Versus Jobs: An Industry-Level Analysis of Sweden

This paper aims to investigate whether the claimed conflict regarding "jobs versus the environment" exists in the Swedish manufacturing industry. The impact of environmental management costs on employment is studied using a detailed firm-level panel data for the Swedish manufacturing industry over the period 2001–2008. The results show that the sign and magnitude of such costs on employment ultimately depends on the aggregate sector-level output demand elasticity. If the output demand is inelastic, environmental management costs induce small positive net changes in employment, while a more elastic output demand could offset the positive effect and result in negative, but in most sectors relatively small, net effects on employment. Hence, the results do not generally indicate any substantial trade-off between jobs and the environment. However, in the absence of empirically estimated demand effects, the policy implication from this study still generally advocates a careful attitude regarding national environmental initiatives for sectors exposed to world market price competition.