In this paper, we examine the impact of air pollution on the job location choice of a highly educated labor force. Using the administrative job contract records of all graduates from Tsinghua University from 2005 to 2016, we find that air pollution significantly reduces the probability of elite graduates accepting job offers in a polluted city. Specifically, all else equal, if a city’s PM2.5 level increases by 10 μg/m3, the share of Tsinghua graduates choosing that city will decrease by 0.23 percentage point (9% of the mean value). This “crowding-out” effect is larger for master’s and doctoral graduates, but insignificant for undergraduates. A placebo test finds this effect does not exist for individuals who had signed a job contract prior to university admission, which strengthens our finding. Heterogeneity analysis indicates that males, students who grew up in cleaner provinces, and students graduating from school of the environment are more sensitive to air pollution. Different levels of preference for clean air and tolerance to pollution, as well as whether having the knowledge of pollution’s harms, can effectively explain the heterogeneous effect of air pollution’s impacts on job location choices of those elites.
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See reports in China Business Review (https://www.chinabusinessreview.com/air-pollution-impedes-executive-hiring-in-china/), Reuters (https://www.reuters.com/article/us-china-pollution-survey-idUSBREA2I0KU20140319) and Bloomberg (https://www.bloomberg.com/news/articles/2014-04-10/chinas-pollution-costs-companies-in-air-filters-employee-perks).
There are 35 large and medium-sized cities in China, including Beijing, Tianjin, Shijiazhuang, Taiyuan, Huhehaote, Shenyang, Dalian, Changchun, Harbin, Shanghai, Nanjing, Hangzhou, Ningbo, Hefei, Fuzhou, Xiamen, Nanchang, Jinan, Qingdao, Zhengzhou, Wuhan, Changsha, Guangzhou, Shenzhen, Nanning, Haikou, Chongqing, Chengdu, Guiyang, Kunming, Xi'an, Lanzhou, Xining, Yinchuan, Urumqi. During our study period, more than 94% of Tsinghua graduates chose to work in one of the large and medium-sized cities in China, which means elite graduates seldom select to work in small cities, and thus we set the large and medium-sized cities as their potential working places.
We also use the ranks of PM2.5 as well as other economic variables of Beijing among the 35 large and medium-sized cities in the graduates’ location choice model, the results are consistent with those using the relative level indicators.
We also try to cluster the standard errors by students’ department (also major) as a robustness check. The results are consistent with the results when clustering the standard errors at the home province level.
The choice of cohort that is just 1 year earlier, sharejt−1, is not used because it is also highly influenced by the pmjt−1. For samples in 2005/2006, we use the average share in the whole study period as the 2-year-lag choice share.
As for the choice of cutoffs (60 km and 300 km), we refer to the study of Fan et al. (2018). We also tried different distances and the results are robust.
We calculate the variance inflation factors (VIFs) for independent variables, which are all less than 3, thus indicating there is little risk of multicollinearity in this model.
Stock et al. (2005) estimate the critical value of the Cragg–Donald statistic to be equal to 16.38 for a model with one endogenous regressors and one instrument.
If ding xiang pei yang students refuse to comply with the contract after graduation, they will be charged a high penalty, which is double the amount of the subsidy received during their whole study period. Further, they cannot receive their diploma from Tsinghua University and cannot register for graduation information online for 5 years.
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Zheng, S., Zhang, X., Sun, W. et al. Air pollution and elite college graduates’ job location choice: evidence from China. Ann Reg Sci 63, 295–316 (2019). https://doi.org/10.1007/s00168-019-00939-6