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The impact of air quality on innovation activities in China

Jingbo Cui, Shaoqing Huang and Chunhua Wang

Journal of Environmental Economics and Management, 2023, vol. 122, issue C

Abstract: Severe air quality hurts human capital and threatens innovative outcomes. Using unique data containing 12.8 million patent applications in China, this paper examines the causal effect of particulate matter with a diameter of 2.5 μm or less (PM2.5) on patent innovation. We estimate a two-stage least square model with thermal inversion as an instrumental variable. Our findings show that a one μg/m3 increase in the annual average PM2.5 concentration leads to a 1.3% decrease in the number of patents. Annual fluctuations in PM2.5 concentration levels across cities caused the total number of patents to decrease by 1.1% during the 2006–2010 period. From 2011 to 2015, the improvement in air quality increased the number by about 2.0%. It demonstrates another innovation co-benefit of improving air quality due to the tightened regulation.

Keywords: Air pollution; Patent innovation; Thermal inversions (search for similar items in EconPapers)
JEL-codes: O30 Q53 R11 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:122:y:2023:i:c:s0095069623001110

DOI: 10.1016/j.jeem.2023.102893

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Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

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