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The impact of regional environmental amenity on skill aggregation across regions in developing countries: evidence from air pollution in China

Abstract

This paper investigates the impact of an environmental amenity on regional skill aggregation, defined as the share of highly educated people. I analyzed the impact of air quality on skill aggregation across prefecture-level cities in China using college graduates as the measure of skill aggregation. By exploiting exogenous air quality variation from a Chinese heating policy known as the Huai River Policy, I identified a considerable negative impact of air pollution on the share of high-skilled people in the city population. This indicates that an environmental amenity has considerable potential to influence regional growth even in developing countries.

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Notes

  1. 1.

    This assumes that people live in the place where they work, but it need not always hold. For instance, firms can move to cleaner places but people may just choose to commute. In this case, the air pollution will influence the distribution of firms but not the skill aggregation.

  2. 2.

    However, PM2.5 matter is not the only pollutant that influences people’s migration decision making. In fact, previous studies on the Huai River policy (Chen et al. 2013) found a large discontinuity in PM10 concentration also.

  3. 3.

    P value of joint significance test for linear polynomial term is 0.2611.

  4. 4.

    Additional controls: gross domestic product of the city, realized foreign capital investment of city. Results are available upon request.

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Correspondence to Seung-hun Chung.

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Appendix

Appendix

See Tables 14 and 15.

Table 14 OLS results for predicted share of college graduates
Table 15 Regression discontinuity in college graduate share: 2000 and 2010 samples separately
  • Control variables (geography and meteorology): average temperature for hottest month (mostly August) and coldest month (mostly January), annual average temperature, annual average precipitation, longitude of the city center.

  • Control variables (social): year dummy for 2010, city population size, population density, employees in secondary industry as share of non-agricultural population.

See Tables 16 and 17.

Table 16 Regression discontinuity in college graduate share: local linear non-parametric method
Table 17 Regression discontinuity in college graduate share: local linear non-parametric method with different bandwidths

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Chung, Sh. The impact of regional environmental amenity on skill aggregation across regions in developing countries: evidence from air pollution in China. Asia-Pac J Reg Sci 4, 27–53 (2020). https://doi.org/10.1007/s41685-019-00125-8

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JEL Classification

  • O44
  • R11
  • R23
  • Q53

Keywords

  • Skill aggregation
  • Amenities
  • Regional growth