Industrialization and pollution: The long-term Impact of early-life exposure on human capital formation

Abstract

Air quality in developing countries is often much worse than in developed economies, yet evidence on the long-term human capital effects of air pollution in these settings is limited. This paper uses a cohort difference-in-differences approach to examine the impact of early-life exposure to air pollution during China’s 1950s industrialization on human capital formation. It assumes that economic opportunities linked to industrial plants impact upwind and downwind counties similarly within a 30-mile radius. The results indicate that moving from the 25${}^{\mathrm{th}}$ to 75${}^{\mathrm{th}}$ percentile of exposure reduces children’s education by approximately 0.11 years. This effect size is notably larger than the impacts of three other factors affecting educational attainment in both China and the United States.