The Clean Air Act and Local Employment Base Sensitivity.

This article examines the impact of nonattainment regulations under the U.S. Clean Air Act (CAA) on the sensitivity of local county employment to national economic fluctuations. Using nationwide county-level data from 1979 to 2019 and employing difference-in-differences analysis with Coarsened Exact Matching, the study finds that nonattainment status for ground-level ozone immediately reduces employment sensitivity, while sulfur dioxide (SO2) nonattainment produces a delayed but significant reduction after about 25 years. These effects persist even after counties regain attainment status, reflecting lasting changes in local industrial structure and employment patterns. The findings suggest that CAA regulations influence local economic resilience by encouraging industrial diversification and shifting employment away from polluting industries, with implications for local economic development policies aimed at managing transitions and enhancing fiscal stability.