Pollution and the Intergenerational Transmission of Human Capital

John Voorheis (Census)

Abstract:

Using a newly constructed dataset linking administrative, survey and decennial Census data, we evaluate the effect of early life pollution exposure on the long-run effects of the individuals directly affected, as well as the persistence of these effects across generations -- the effects on the children of those that were in-utero exposed. Exploiting variation in particulate matter, which sharply dropped following the enactment of the 1970 Clean Air Act Amendments, we find that reductions in early life exposure to particulate matter is associated with significant increases in the later life earnings of affected individuals. In addition, we find evidence that the consequences of this exposure are transmitted across generations. The children of those affected by reduced in-utero pollution exposure are more likely to attend college. Furthermore, we find no differential effect between the adopted and biological children of affected parents, and find suggestive evidence that parents who experienced large declines in pollution exposure are more likely to engage in child enrichment activities. This suggests that the transmission mechanism arises through parental investments and resources, rather than genetic channels. Collectively, our results highlight the long-run and persistent effects of environmental quality both within and across generations, and indicate that changes in the distribution of environmental hazard may be important for understanding economic opportunity.