Policy-Induced Environmental Inequality: Firm Behaviors and Consequent Health and Labor Outcomes

This study uncovers the distributional impact of China’s 11th Five-Year Plan, which triggered spatially-differentiated water pollution abatement. We document that firm water emissions relatively increased in low versus high socioeconomic status (SES) areas due to the policy and the policy encouraged new polluting firms to enter low-SES areas. The policy also widened the gap in health and labor outcomes, particularly for those without tap water access: disparities in risks of tumor, cardiovascular disease, labor supply, and wages increased. Our findings demonstrate that policy-induced redistribution of pollution can interact with unequal access to defensive infrastructure to exacerbate inequality in well-being.