Working Paper: CEPR ID: DP16700
Authors: Yuk Ying Chang; Sudipto Dasgupta
Abstract: We construct a time-series of news coverage about air pollution in China for the period 1977-2019, and verify that such abnormal news coverage is associated with worse air quality in major Chinese cities, for which information is available for a shorter period. We find that that cross-border migration of Chinese citizens, the number of Chinese students going abroad to study, as well as capital flight from China, increase when there is an unexpected increase in air pollution news coverage. We find that U.S. regions with stronger historical ethnic ties to China experience higher property price growth when the “innovation” in air pollution news coverage is higher. We find similar results for residential prices in international cities. Air-pollution driven student inflows increase property prices and employment growth in regions that are major destinations of foreign students. Our study suggests that perception of local environmental and climate risk can have major consequences for the cross-border relocation of capital and labor.
Keywords: air pollution; climate change; migration; property prices
JEL Codes: G12; G15; Q53; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| air pollution news coverage (Q53) | cross-border migration (F22) |
| air pollution news coverage (Q53) | capital flight (F21) |
| air pollution perceptions (Q53) | property price growth (R31) |
| influx of Chinese students (F29) | property prices (R31) |
| influx of Chinese students (F29) | employment growth (O49) |