The health and welfare effects of environmental regulation

Using the difference-in-differences method, we examine the impact of environmental regulation on individual health, employment, income, and welfare. We find that environmental regulation significantly improves health, but reduces employment and wage levels, although the effect on income is not statistically significant. The impact of environmental regulation is heterogeneous at different stages of economic development, and the high-age and the less educated are the main gainers and bearers of health benefits and economic costs. The welfare effect suggests that the welfare gains from improved health due to environmental regulation effectively compensate for the welfare losses from reduced employment.