Do the states try to trade off environmental quality tomorrow for jobs today?

The paper models and tests the hypothesis that a self-interested policymaker will pursue projects that create jobs now at the environmental expense of future generations. An optimal-control model shows that jurisdictions are most likely to pursue such a project when they are characterized by low income, high unemployment, politically powerful industry, pollution-intensive industry, poorly functioning land markets, or residents who are near the end of their lives. The paper tests the model with OLS specifications of subnational expenditures per capita in the U.S. for hazardous waste in the 1980s and for air pollution in the 1960s. The results reject the hypothesis that jurisdictions try to trade off future environmental quality for current manufacturing jobs. The results instead suggest a powerful relationship between housing values and environmental expenditures.