| Abstrakt: |
Conventional benefit-cost analyses of proposed regulations assume full employment and minimal adjustment costs. Prior to mid-2008, the U.S. economy experienced more than 155 consecutive months of (seasonally adjusted) unemployment rates below 6 percent. Thus, the assumption of full employment and limited adjustment costs seemed reasonable, especially for regulations with costs that were small relative to the national economy. The economic environment changed with the Great Recession. In fact, in September 2014, as I was preparing a draft of this article, the national unemployment rate dropped below 6 percent. It was the first sustained drop since July 2008. Nonetheless, in December 2014, about 9 million people (16 years and older) remained unemployed, with unemployment rates (in seasonally adjusted terms) varying widely by state, from 2.8 percent in North Dakota to 7.2 percent in Mississippi.¹ This variation in unemployment rates, uncertainty about the overall "health" of the national economy, together with vivid memories of the recession, has led policy analysts to focus more directly on the employment effects of new regulations. They are now routinely asked where this information can be found in their benefit-cost analyses and how do adjustment costs contribute to the costs considered in these assessments. Indeed, ask any policy analyst at the state level, faced with evaluating the effects of EPA's proposed coal rule,² about the economic impact of greatest concern, and the answer is likely to be the rule's employment effects. [ABSTRACT FROM AUTHOR] |
