IDEAS home Printed from https://ideas.repec.org/a/eee/jeeman/v122y2023ics0095069623001110.html
   My bibliography  Save this article

The impact of air quality on innovation activities in China

Author

Listed:
  • Cui, Jingbo
  • Huang, Shaoqing
  • Wang, Chunhua

Abstract

Severe air quality hurts human capital and threatens innovative outcomes. Using unique data containing 12.8 million patent applications in China, this paper examines the causal effect of particulate matter with a diameter of 2.5 μm or less (PM2.5) on patent innovation. We estimate a two-stage least square model with thermal inversion as an instrumental variable. Our findings show that a one μg/m3 increase in the annual average PM2.5 concentration leads to a 1.3% decrease in the number of patents. Annual fluctuations in PM2.5 concentration levels across cities caused the total number of patents to decrease by 1.1% during the 2006–2010 period. From 2011 to 2015, the improvement in air quality increased the number by about 2.0%. It demonstrates another innovation co-benefit of improving air quality due to the tightened regulation.

Suggested Citation

  • Cui, Jingbo & Huang, Shaoqing & Wang, Chunhua, 2023. "The impact of air quality on innovation activities in China," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    • Handle: RePEc:eee:jeeman:v:122:y:2023:i:c:s0095069623001110
    DOI: 10.1016/j.jeem.2023.102893
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0095069623001110
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jeem.2023.102893?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
    2. Tom Y. Chang & Joshua Graff Zivin & Tal Gross & Matthew Neidell, 2019. "The Effect of Pollution on Worker Productivity: Evidence from Call Center Workers in China," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 151-172, January.
    3. Eva Arceo & Rema Hanna & Paulina Oliva, 2016. "Does the Effect of Pollution on Infant Mortality Differ Between Developing and Developed Countries? Evidence from Mexico City," Economic Journal, Royal Economic Society, vol. 126(591), pages 257-280, March.
    4. Mara P. Squicciarini & Nico Voigtländer, 2015. "Human Capital and Industrialization: Evidence from the Age of Enlightenment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(4), pages 1825-1883.
    5. Daron Acemoglu & Ufuk Akcigit & Harun Alp & Nicholas Bloom & William Kerr, 2018. "Innovation, Reallocation, and Growth," American Economic Review, American Economic Association, vol. 108(11), pages 3450-3491, November.
    6. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.
    7. Sun, Xiuli & Li, Haizheng & Ghosal, Vivek, 2020. "Firm-level human capital and innovation: Evidence from China," China Economic Review, Elsevier, vol. 59(C).
    8. Yu Qin & Hongjia Zhu, 2018. "Run away? Air pollution and emigration interests in China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(1), pages 235-266, January.
    9. Zhao Chen & Zhikuo Liu & Juan Carlos Suárez Serrato & Daniel Yi Xu, 2021. "Notching R&D Investment with Corporate Income Tax Cuts in China," American Economic Review, American Economic Association, vol. 111(7), pages 2065-2100, July.
    10. Liu, Qing & Ma, Hong, 2020. "Trade policy uncertainty and innovation: Firm level evidence from China’s WTO accession," Journal of International Economics, Elsevier, vol. 127(C).
    11. Jingbo Cui & Junjie Zhang & Yang Zheng, 2018. "Carbon Pricing Induces Innovation: Evidence from China's Regional Carbon Market Pilots," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 453-457, May.
    12. Jans, Jenny & Johansson, Per & Nilsson, J. Peter, 2018. "Economic status, air quality, and child health: Evidence from inversion episodes," Journal of Health Economics, Elsevier, vol. 61(C), pages 220-232.
    13. Olivier Deschênes & Michael Greenstone, 2011. "Climate Change, Mortality, and Adaptation: Evidence from Annual Fluctuations in Weather in the US," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 152-185, October.
    14. Tan, Zhidong & Yan, Lina, 2021. "Does air pollution impede corporate innovation?," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 937-951.
    15. Deschenes, Olivier & Wang, Huixia & Wang, Si & Zhang, Peng, 2020. "The effect of air pollution on body weight and obesity: Evidence from China," Journal of Development Economics, Elsevier, vol. 145(C).
    16. Joshua Graff Zivin & Matthew Neidell, 2012. "The Impact of Pollution on Worker Productivity," American Economic Review, American Economic Association, vol. 102(7), pages 3652-3673, December.
    17. Antoine Dechezleprêtre & Nicholas Rivers & Balazs Stadler, 2019. "The economic cost of air pollution: Evidence from Europe," OECD Economics Department Working Papers 1584, OECD Publishing.
    18. Graff Zivin, Joshua & Liu, Tong & Song, Yingquan & Tang, Qu & Zhang, Peng, 2020. "The unintended impacts of agricultural fires: Human capital in China," Journal of Development Economics, Elsevier, vol. 147(C).
    19. Avraham Ebenstein & Victor Lavy & Sefi Roth, 2016. "The Long-Run Economic Consequences of High-Stakes Examinations: Evidence from Transitory Variation in Pollution," American Economic Journal: Applied Economics, American Economic Association, vol. 8(4), pages 36-65, October.
    20. repec:zbw:bofrdp:2015_027 is not listed on IDEAS
    21. Ajay Bhaskarabhatla & Luis Cabral & Deepak Hegde & Thomas Peeters, 2021. "Are Inventors or Firms the Engines of Innovation?," Management Science, INFORMS, vol. 67(6), pages 3899-3920, June.
    22. Natarajan Balasubramanian & Jagadeesh Sivadasan, 2011. "What Happens When Firms Patent? New Evidence from U.S. Economic Census Data," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 126-146, February.
    23. Stafford, Tess M., 2015. "Indoor air quality and academic performance," Journal of Environmental Economics and Management, Elsevier, vol. 70(C), pages 34-50.
    24. Fang, Jing & He, Hui & Li, Nan, 2020. "China's rising IQ (Innovation Quotient) and growth: Firm-level evidence," Journal of Development Economics, Elsevier, vol. 147(C).
    25. Zhang, Xin & Zhang, Xiaobo & Chen, Xi, 2017. "Happiness in the air: How does a dirty sky affect mental health and subjective well-being?," Journal of Environmental Economics and Management, Elsevier, vol. 85(C), pages 81-94.
    26. James Archsmith & Anthony Heyes & Soodeh Saberian, 2018. "Air Quality and Error Quantity: Pollution and Performance in a High-Skilled, Quality-Focused Occupation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(4), pages 827-863.
    27. Ghanem, Dalia & Zhang, Junjie, 2014. "‘Effortless Perfection:’ Do Chinese cities manipulate air pollution data?," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 203-225.
    28. Hu, Albert Guangzhou & Jefferson, Gary H., 2009. "A great wall of patents: What is behind China's recent patent explosion?," Journal of Development Economics, Elsevier, vol. 90(1), pages 57-68, September.
    29. repec:zbw:bofrdp:urn:nbn:fi:bof-201512111472 is not listed on IDEAS
    30. Michael Greenstone, 2002. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1175-1219, December.
    31. Michael Greenstone & Guojun He & Ruixue Jia & Tong Liu, 2022. "Can Technology Solve the Principal-Agent Problem? Evidence from China's War on Air Pollution," American Economic Review: Insights, American Economic Association, vol. 4(1), pages 54-70, March.
    32. Francesco Cinnirella & Jochen Streb, 2017. "The role of human capital and innovation in economic development: evidence from post-Malthusian Prussia," Journal of Economic Growth, Springer, vol. 22(2), pages 193-227, June.
    33. Jiaxiu He & Haoming Liu & Alberto Salvo, 2019. "Severe Air Pollution and Labor Productivity: Evidence from Industrial Towns in China," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 173-201, January.
    34. Shihe Fu & V Brian Viard & Peng Zhang, 2021. "Air Pollution and Manufacturing Firm Productivity: Nationwide Estimates for China [Management and shocks to worker productivity]," The Economic Journal, Royal Economic Society, vol. 131(640), pages 3241-3273.
    35. Sager, Lutz, 2019. "Estimating the effect of air pollution on road safety using atmospheric temperature inversions," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    36. Heyes, Anthony & Zhu, Mingying, 2019. "Air pollution as a cause of sleeplessness: Social media evidence from a panel of Chinese cities," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yao, Yao & Li, Xue & Smyth, Russell & Zhang, Lin, 2022. "Air pollution and political trust in local government: Evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).
    2. Shihe Fu & V. Brian Viard, 2022. "A mayors perspective on tackling air pollution," Chapters, in: Charles K.Y. Leung (ed.), Handbook of Real Estate and Macroeconomics, chapter 16, pages 413-437, Edward Elgar Publishing.
    3. Guo, Liwen & Cheng, Zhiming & Tani, Massimiliano & Cook, Sarah, 2024. "Air pollution and education investment," Energy Economics, Elsevier, vol. 132(C).
    4. Zhenyu Yao & Wei Zhang & Xinde Ji & Weizhe Weng, 2023. "Short-Term Exposure to Air Pollution and Cognitive Performance: New Evidence from China’s College English Test," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(1), pages 211-237, May.
    5. Chen, Xiaoguang & Chen, Luoye & Xie, Wei & Mueller, Nathaniel D. & Davis, Steven J., 2023. "Flight delays due to air pollution in China," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    6. Clara Kögel, 2022. "The impact of air pollution on labour productivity in France," Documents de travail du Centre d'Economie de la Sorbonne 22020, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    7. Guo, Liwen & Cheng, Zhiming & Tani, Massimiliano & Cook, Sarah & Zhao, Jiaqi & Chen, Xi, 2022. "Air Pollution and Entrepreneurship," GLO Discussion Paper Series 1196, Global Labor Organization (GLO).
    8. Felix Bracht & Dennis Verhoeven, 2021. "Air pollution and innovation," CEP Discussion Papers dp1817, Centre for Economic Performance, LSE.
    9. Li, Xue & Smyth, Russell & Yao, Yao, 2023. "Extreme temperatures and out-of-pocket medical expenditure: Evidence from China," China Economic Review, Elsevier, vol. 77(C).
    10. Nikolai Cook, Anthony Heyes, Nicholas Rivers, 2023. "Clean Air and Cognitive Productivity: Effect and Adaptation," LCERPA Working Papers bm0137, Laurier Centre for Economic Research and Policy Analysis.
    11. He, Juan & Zheng, Xiaoyong, 2024. "Do consumers try to solve the air pollution problem themselves? the effects of air pollution on purchase of hybrid and electric cars," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 850-868.
    12. Xie, Tingting & Yuan, Ye & Zhang, Hui, 2023. "Information, awareness, and mental health: Evidence from air pollution disclosure in China," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    13. Tiago Cavalcanti & Kamiar Mohaddes & Hongyu Nian & Haitao Yin, 2023. "Air pollution and firm-level human capital, knowledge and innovation," Working Papers EPRG2301, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    14. Qi He & Xinde (James) Ji, 2021. "The Labor Productivity Consequences of Exposure to Particulate Matters: Evidence from a Chinese National Panel Survey," IJERPH, MDPI, vol. 18(23), pages 1-22, December.
    15. Hui Deng & Rui Du & Dongmei Guo & Weizeng Sun & Yuhuan Xia, 2023. "High‐stakes examinations and educational inequality: Evidence from transitory exposure to air pollution," Economic Inquiry, Western Economic Association International, vol. 61(3), pages 546-571, July.
    16. Bridget Hoffmann & Juan Pablo Rud, 2022. "Exposure or Income? The Unequal Effects of Pollution on Daily Labor Supply," Working Papers 109, Red Nacional de Investigadores en Economía (RedNIE).
    17. Nguyen, Hung T. & Pham, Mia Hang, 2021. "Air pollution and behavioral biases: Evidence from stock market anomalies," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    18. Ron Chan & Martino Pelli & Veronica Vienne, 2023. "Air Pollution, Smoky Days and Hours Worked," CIRANO Working Papers 2023s-15, CIRANO.
    19. Cook, Nikolai & Heyes, Anthony, 2022. "Pollution pictures: Psychological exposure to pollution impacts worker productivity in a large-scale field experiment," Journal of Environmental Economics and Management, Elsevier, vol. 114(C).
    20. Michelle Marcus, 2021. "Pollution at schools and children's aerobic capacity," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 3016-3031, December.

    More about this item

    Keywords

    Air pollution; Patent innovation; Thermal inversions;
    All these keywords.

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeeman:v:122:y:2023:i:c:s0095069623001110. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622870 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.