Environmental quality, human capital and growth
2018
Sapci, Onur | Shogren, Jason F.
This study uses U.S. county-level pollution changes from 2007 to 2009 induced by the 2007–2009 recession to measure the impact of changes in air quality on human capital. The exogenous shocks to air quality are induced by a recession in manufacturing and construction sectors. This study compares the changes in human capital in counties that had large pollution reductions to the changes in human capital in counties with small pollution reductions while controlling for income changes and other heterogeneous trends across counties. We first present a motivating model to show how environmental degradation affects human capital investments through negative health effects. The model illustrates how poor environmental quality can slow economic growth due to negative impacts on human capital. Using an extensive panel data for U.S. counties, the empirical results show that a 1% reduction in pollution increases the human capital stock by 0.10%.
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