The validity of existing empirical tests of the Pollution Haven Hypothesis (PHH) is constantly under scrutiny due to two shortcomings. First, the issues of unobserved heterogeneity and measurement error in environmental regulation are typically ignored due to the lack of a credible, traditional...

Basmann (Basmann, R.L., 1957, A generalized classical method of linear estimation of coefficients in a structural equation. Econometrica 25, 77-83; Basmann, R.L., 1959, The computation of generalized classical estimates of coefficients in a structural equation. Econometrica 27, 72-81) introduced...