Data and Code For: The Productivity Consequences of Pollution-Induced Migration in China
Principal Investigator(s): View help for Principal Investigator(s) Gaurav Khanna, University of California – San Diego; Wenquan Liang, Jinan University; Mushfiq Mobarak, Yale University; Ran Song, National University of Singapore
Version: View help for Version V2
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Project Citation:
Project Description
Abstract: We quantify how pollution affects aggregate productivity and welfare in spatial equilibrium. We document a robust pattern in which skilled workers in China emigrate away from polluted cities, more than the unskilled. These patterns are evident under various empirical specifications, such as when instrumenting for pollution using distant upwind power-plants, or thermal inversions that trap pollutants. Pollution changes the spatial distribution of skilled and unskilled workers, which increases returns-toskill in cities that the educated emigrate from. We quantify the loss in aggregate productivity due to this re-sorting by estimating a spatial equilibrium model. Counterfactual simulations show that reducing pollution increases productivity through spatial re-sorting by approximately as much as the direct health benefits of clean air. We identify a new channel through which pollution lowers aggregate productivity significantly. Hukou mobility restrictions exacerbate welfare losses. Skilled workers’aversion to pollution explains a substantial portion of the wage-gap between cities.
Scope of Project
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
J61 Geographic Labor Mobility; Immigrant Workers
Q52 Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
R12 Size and Spatial Distributions of Regional Economic Activity
Methodology
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