How air pollution inhibits economic development: empirical analysis and mechanism verification based on prefecture-level data in China

In order to verify the restraining effect of air pollution on economic development, this paper uses the spatial Durbin model and the prefecture-level panel data in China from 2004 to 2019 to examine the relationship between air pollution and economic development. It analyzes the average effect of air pollution on economic development, as well as the spatial spillover effect and marginal incremental effect. The results show that air pollution can not only directly affect local economic development, but also have a negative spatial spillover effect on economic development to the surrounding areas. The results of the heterogeneity analysis demonstrate the impact of air pollution on economic development in different regions and dimensions. And the quantile regression results of panel data show that the more serious the air pollution, the stronger the marginal effect on economic development. The mechanism testing results also confirm the role of resource mismatch factors, industrial structure factors, and innovation factors in the process of air pollution affecting economic development.