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The value of air quality in Chinese cities: Evidence from labor and property market outcomes

Xuan Huang and Bruno Lanz

No 38-2015, CIES Research Paper series from Centre for International Environmental Studies, The Graduate Institute

Abstract: Using a dual-market sorting model of workers' location decisions, this paper studies the capitalization of air pollution in wages and property prices across Chinese cities. We exploit quasi-experimental variations in particulate matter (PM10) concentration induced by a policy subsidizing coal-based winter heating in northern China, specifying a regression discontinuity design based on cities' location relative to the policy boundary. We estimate that the elasticity of wages and house prices with respect to PM10 concentration is 0.41 and -0.71 respectively. Our results are robust to the use of an alternative source of exogenous variation in PM10 concentration (sandstorms), supporting the view that the local effect we measure provides policy-relevant information on the value of air quality improvements in China.

Keywords: Hedonic model; Air pollution; Labor market; Housing prices; Local public goods. (search for similar items in EconPapers)
JEL-codes: H41 J31 Q53 R31 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-11-16
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env, nep-lma, nep-tra and nep-ure
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http://repec.graduateinstitute.ch/pdfs/ciesrp/CIES_RP_38.pdf (application/pdf)

Related works:
Journal Article: The Value of Air Quality in Chinese Cities: Evidence from Labor and Property Market Outcomes (2018) Downloads
Working Paper: The value of air quality in Chinese cities: Evidence from labor and property market outcomes (2017) Downloads
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