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Title: The Long Shadow of Industrial Pollution: Environmental Amenities and the Distribution of Skills

Citation Type: Miscellaneous

Publication Year: 2017

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Abstract: This paper presents theory and evidence on the role of environmental amenities in shaping the competitiveness of post-industrial cities. I assemble a rich database at a fine spatial resolution to examine the impact of historical pollution on the distribution of skilled workers and residents within cities today. I find that census tracts downwind of highly polluted 1970s industrial sites were associated with higher pollution levels in the 1970s but not after 2000. However, they were less skilled and had lower wage and housing values in 2000, a pattern which became more prominent between 1980 and 2000. These findings suggest the presence of skill sorting on pollution and strong subsequent agglomeration effects. To quantify the contribution of different mechanisms, I build and estimate a multi-sector spatial equilibrium framework that introduces hetero-geneity in local productivity and workers' valuation for local amenities across sectors, and allows initial sorting to be magnified by production and residential externalities. Estimation of the model suggests that historical pollution is associated with lower current productivity and amenity levels. The effects are more pronounced for productivity, more skilled sectors and central tracts. I use the framework to evaluate the impact of counterfactual pollution cuts in different parts of cities on nationwide welfare and the cross-city distribution of skills. †

Url: https://pdfs.semanticscholar.org/696c/eb28c18ed343b4e2d42086c5ce5804194037.pdf

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Authors: Lin, Yatang

Publisher: London School of Economics

Data Collections: IPUMS USA

Topics: Natural Resource Management

Countries: United States