United States (JR) – Exposure to air pollution has been shown to harm our health. A new paper looks at how the Clean Air Act of 1970 – legislation that mandated a reduction in air pollutants from factories, power plants and cars – not only improved Americans’ health, but seems to have made us more productive and richer in the long run.
The study, by three labor economists in the United States, uses government data to look at the earnings of 30-year-olds who were born just before and just after the Clean Air Act (CAA) took effect. The data comes from the Census Bureau’s Longitudinal Employer-Household Dynamics survey, allowing the authors “to observe adult outcomes linked to location and exact date of birth” for millions of individuals.
The authors use a variety of controls to isolate the regulation’s effect and estimate whether children exposed to lower levels of airborne pollution (measured in total suspended particulates, or TSP) in utero and as infants are more economically advantaged at age 30.
Building on evidence that children living in regions with cleaner air earn higher school test scores, the authors note a number of important caveats. The data do not allow them to measure movement between counties. Moreover, the benefits of lower TSP exposure are cumulative, so even those born before the CAA benefited as they grew up.
A 10 percent reduction in total suspended particulates (TSP) following CAA implementation is associated with a 1 percent increase in wages at age 30. (Alternatively, higher pollution levels in an individual’s county and year of birth are associated with lower wages at age 30.)
This TSP reduction is associated with a 0.7 percent increase in the number of quarters worked annually (for example, people shifting from part-time to full-time jobs). That’s a cumulative lifetime gain of $4,300 (present value at a 5 percent annualized discount rate). That’s $6.5 billion in lifetime earnings to all Americans born in each year following implementation, or around $118 billion in 2008 dollars across the 40 years between the CAA’s enactment and the end of the study period data.
Those born after the CAA implementation appear less likely to receive welfare benefits.
The findings suggest that “the benefits of cleaner air in utero and in early life may also operate through channels that affect adult outcomes beyond education, such as health and non-cognitive ability.”