Economic Policy Uncertainty and Environmental Inequality:Effects and Mechanisms

Zhonghui Luo and Kenji Takeuchi

Discussion papers from Graduate School of Economics , Kyoto University

Abstract: This study examines how Economic Policy Uncertainty (EPU) shapes disparities in air pollution exposure across individuals with different levels of education. Using a shift–share instrumental variable based on world import demand to predict provincial EPU fluctuations, we construct an individual-level panel dataset linking personal exposure to EPU and SO2 concentration across six survey waves from 2000 to 2015. The results indicate that a 1% increase in the EPU index leads to an average rise of approximately 1.15μg/m3 in SO2 exposure among individuals without a high school degree, relative to those with one. Mechanism analyses suggest that this effect operates mainly through two channels:changes in government regulatory behavior and in firm-level emission decisions.

Keywords: Economic Policy Uncertainty; Environmental Inequality; Government Regulation; Firm Emission Decisions (search for similar items in EconPapers)
JEL-codes: D63 D81 Q53 (search for similar items in EconPapers)
Pages: 30
Date: 2026-02
New Economics Papers: this item is included in nep-inv
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Persistent link: https://EconPapers.repec.org/RePEc:kue:epaper:e-25-011

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