Journal of Cleaner Production 271 (2020) 122469

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Does air pollution aggravate income inequality in China? An empirical

analysis based on the view of health
Feng Liu a, *, Meina Zheng b, Meichang Wang a
a
School of Economics and Management, Southeast University, No 2, Sipailou, Nanjing 210096, Jiangsu, China
b
School of Transportation, Southeast University, No 2, Sipailou, Nanjing 210096, Jiangsu, China

a r t i c l e i n f o a b s t r a c t

Article history: Given the rapid development of the Chinese economy, especially its accelerated urbanization, air
Received 14 February 2020 pollution and income inequality, as two of the most important global issues, have also become hot topics
Received in revised form in China. However, limited attention has been devoted to understanding their joint evolution in the
25 May 2020
literature. In this study, we thus investigate the relationship between them using a multi-level nested
Accepted 25 May 2020
Available online 2 July 2020
data model, which enables us to estimate the long-run distribution effect of air pollution on individuals
of different socioeconomic statuses, based on China’s city-level PM2.5 emissions and individual-level
Handling Editor: Dr Sandra Caeiro income. We further examine the mechanisms behind the evolution using a 3SLS model. The estima-
tion results reveal that the increase in air pollution concentration has short-term positive production
Keywords: effects and long-term negative impacts on individual income, and will exacerbate the income inequality
PM2.5 across socioeconomic statuses. Individuals of lower socioeconomic status have disadvantages in
Socioeconomic status achieving efficient avoiding knowledge and measures. The results of 3SLS model confirm the existence of
Hierarchical linear model the health channel through which air pollution exerts influence on income inequality. These results
Health
provide a roadmap for policymakers. First, a comprehensive assessment of the health burden distribution
3SLS
from air pollution on individuals of different socioeconomic statuses should be considered for envi-
ronmental policymaking. Second, the regional disparities and differences among income groups should
also be considered during this process. Third, equal access to basic public services should be the primary
target of environmental regulations. Moreover, compensation and assistance for the health issues caused
by environmental pollution could be an important supplement to these regulations. Future study could
do further analysis of the specific level of health burden due to different types of pollutants and their
relationship with income inequality.
© 2020 Elsevier Ltd. All rights reserved.

1. Introduction
China has experienced a high-speed economic development
over the last four decades, the per capita GDP increased from RMB
468 in 1980 to RMB 64,644 in 2018. However, at the same time,
various pollutants had significantly increased, especially after
China joined the World Trade Organization in 2001 and gradually
became the world’s factory. According to the statistics on the PM2.5
concentration change during 2008e2015 from the World Health
Organization (WHO), the annual mean PM2.5 in most urban areas
in China is over 40 mg/m3, far exceeding WHO’s guideline value of
* Corresponding author.
E-mail addresses: 230169479@seu.edu.cn, feng.liu0012@gmail.com (F. Liu),
kumiko1023@163.commailto, guxin@seu.edu.cn (M. Zheng), wmc1008@163.com
(M. Wang).
10.0 mg/m3 (WHO, 2016). As such, the health effects of environ-
mental pollution are significant in China, which increases in-
dividuals’ health burden. The WHO estimated that outdoor air
pollution causes approximately 1 million premature deaths in
China, accounted for nearly a quarter of all death causes worldwide
in 2016 (WHO, 2018). In addition to these health effects, increase in
environmental pollution also aggravates poverty and inequality in
China, as its impacts vary by income group. On the one hand, there
may exist a poverty-environmental trap, that is, the environmental
degradation damages health and exacerbates disease problems,
which then leads to lower labor productivity, declining employ-
ment and income (Qi and Lu, 2015). On the other hand, environ-
mental problems have more negative effects on socially or
physically vulnerable populations, as those of higher socioeco-
nomic status (SES) can, to a large extent, escape from these adverse
impacts (Yang and Sheng, 2012). Therefore, existing inequality and

https://doi.org/10.1016/j.jclepro.2020.122469
0959-6526/© 2020 Elsevier Ltd. All rights reserved.
2 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469

poverty due to socioeconomic, institutional, and technological
factors are likely to be aggregated by environmental problems.
As Fig. 1 shows that the level of air pollution represented by
PM2.5 is positively related to the death rate (deaths due to all
causes or diseases of the respiratory system) worldwide, which
suggests the disease burden increases in areas with higher levels of
air pollution. Furthermore, PM2.5 concentrations also display a
positive correlation with poverty (In view of the price effect, we
select the proportion of population living on less than USD 1.90 a
day at 2011 international prices (Poverty PPP) as a control indicator
of the percentage of population living below the national poverty
lines (Poverty national).) and income inequality (Here we measure

Fig. 1. The correlation between environmental pollution and income inequality and mortality during 1990e2016. (a1ea2) shows the relationship between PM2.5 concentration and
poverty. (b1eb2) displays the relationship between PM2.5 concentration and the Gini index. (c1ec2) shows the correlation between PM2.5 concentration and the total ASDR (age
standardized death rate) attributable to all causes per 100,000 (represented by ASDR total) and the ASDR due to diseases of the respiratory system per 100,000 (represented by
ASDR diseases of the respiratory system). And the x axis of c1 is different from c2 due to their ranges are of different orders of magnitude.
Notes: Data come from Solt (2019), World Bank (2017, 2020), and World Health Organization (2018).
 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469
it by the Gini index (Gini) which was developed by Gini (1912)
based on the Lorentz curve and has been widely used to summa-
rize income and wealth distribution information. Its value will fall
between 0 and 100; the smaller the degree of income inequality is,
the smaller the Gini index is, and vice versa. In view of the
advantage of disposable income in reflecting people’s real income,
we also add the Gini index calculated by the disposable income
(Gini disp) as a control indicator.).
Given the analysis above, we can infer that the health problems
due to air pollution would be more serious for individuals of lower
SES. The deterioration of their health is likely to lead to a drop in
productivity, which, in turn, increases the probability of unem-
ployment and potential income loss. The continuation of this trend
can lead to poverty over time, and health becomes the tie which
connects air pollution, poverty, and rising inequality. Therefore, an
integrative understanding of the joint evolution of income
inequality and pollution emissions is needed to reduce poverty and
air pollution together in China, otherwise, a trade-off might occur.
However, little has focused on the interaction between income
inequality and pollution emissions as well as the mechanism
behind in the literature. This paper tries to identify the mechanisms
driving the relationship between environmental pollution and in-
come inequality from the perspective of health, it may contribute to
the pollution emissioneincome inequality literature as follows.
First, we investigate the relationship between PM2.5 and domestic
income change at the individual level for a sample of 59,402 in-
dividuals for the year of 2011, 2013, and 2015 based on the China
Labor-force Dynamic Survey (CLDS) and a satellite PM2.5 dataset.
Second, a hierarchical linear model (HLM) that incorporates survey
data at individual level, PM2.5 and socioeconomic indicators at
city-level is constructed to provide empirical evidence of the im-
pacts of environmental pollution on income inequality. Third, the
mechanism testing part examines the effectiveness of health as a
mediator to connect air pollution and income inequality based on a
three-stage least squares (3SLS) model.
2. Literature review
The academia and citizens have paid little attention to the
integration of environmental problems, health, and income
inequality. The literature generally suggests two aspects of this
topic. First, some scholars proposed that interpersonal and inter-
group differences in terms of SES result in different probabilities of
exposure to environmental pollution (Leitmann, 1994; Graff Zivin
and Neidell, 2013). Specifically, those of higher SES are more
likely to work indoor with limited exposure to various pollutants,
and have a high level of access to health care (Dixon et al., 1995;
Picatoste et al., 2018). Moreover, factories are usually located near
low-income neighborhoods (Duraiappah, 1998; Daniels and
Friedman, 1999), as costs were generally lower in these places
(Wolverton, 2009). These may further aggravate the health
inequality caused by environmental pollution (Forastiere et al.,
2007). In the context of Europe, North America, and other devel-
oped countries, people of lower SES are usually associated with
ethnic minorities and are more vulnerable to a heavier disease
burden due to environmental pollution, thus suffering greater
damages than those of higher SES in terms of productivity and
health level (Kingham et al., 2007; Pinault et al., 2016). Most
developing countries are or will be experiencing a period of rapid
development generally accompanied by the rise in energy con-
sumption. However, limited scientific and technological develop-
ment forces them to utilize more traditional energy resources,
which leads to environmental degradation (Khan et al., 2019a,
2020). Khan et al. (2019b) further examined the connection be-
tween economic factors and carbon dioxide emissions under
3
globalization with the case study of Pakistan, and found the positive
association between them in the long run. Moreover, environ-
mental degradation may worsen with economic growth under the
environmental Kuznets’ curve (EKC) hypothesis, especially for
middle-low income countries, as they are more likely to become
pollution havens (Alvarado et al., 2018). Along with environmental
degradation, income-related inequalities also worsen in developing
countries, similar to developed countries (Repetto, 1997; Khan
et al., 2009). Another stream of research on this topic does not
confirm the association between SES and the relative inequality of
exposure risk to environmental pollution (Gray et al., 2013; Rivas
et al., 2017).
With respect to China, air pollution-induced health problems
are likely to worsen over time (Chen et al., 2013). At the same time,
the environmental injustice in China is more related to its progress
in social development. China has a multi-level social structure,
particularly the binary structure of urban and rural areas, which
leads to environmental inequality between urban and rural resi-
dents (Yang and Sheng, 2012). Neighborhoods with a higher pro-
portion of rural migrant workers have higher air and water
pollution levels, and the underlying mechanisms are similar to the
ethnic differences in the exposure to environmental pollution in
the U.S. (Schoolman and Ma, 2012). Moreover, the decrease in in-
come normally follows a decrease in productivity attributable to
environmental pollution, and individuals of lower SES suffer a
disproportionate loss (Qi and Lu, 2015). Based on the investigation
of Shanxi, China, Miao and Chen (2010) found that the health of
socioeconomically disadvantaged populations was more vulner-
able to ambient air pollution, while those of higher SES could
prevent the adverse effects of air pollution through more pollution
abatement measures. Based on the provincial level data of China,
Zheng and Walsh (2018) also found the air pollution-related health
burden to be negatively associated with the healthcare and edu-
cation levels. The heterogeneity of air pollution’s impact on health
may be more remarkable when considering the spatial effects of air
pollutants (Feng et al., 2019). Moreover, the industrial spatial dis-
tribution and urbanization in China gave rise to air pollution
inequality (Hao et al., 2015), which further exacerbates health in-
equalities (Azimi et al., 2019). However, the relationship between
SES and air pollution may be non-linear in urban China (Jiao et al.,
2018).
Most of these previous studies highlight the environmental
injustice among individuals of different SES, both in China and
abroad. In this connection, a large body of researches have
confirmed the link between pollution and health (Ebenstein et al.,
2016; Lavaine and Neidell, 2017), and health is an important part
of human capital which functions as an investment that could gain
income (Graff Zivin and Neidell, 2013). Therefore, the difference of
ability in reducing the exposure risk to environmental pollution
could probably lead to different levels of investment in human
capital (Graff Zivin and Neidell, 2012). Several studies have indi-
cated that the rise and fall of investment in human capital closely
mirror the changes in productivity, which is crucial to an in-
dividual’s income and reducing the gap in income distribution (Jun
et al., 2011). Therefore, health serves as an important tie to connect
pollution and income inequality. However, the predominant
research on the relationship between pollution and income is based
on the framework of EKC (Esteve and Tamarit, 2012; Wagner, 2015),
and few studies incorporate the health disparities caused by envi-
ronmental injustice and income inequality into the same analytic
framework. How health becomes a channel to deliver the negative
effects caused by environmental pollution to income inequality,
what is the specific transmission mechanism behind, particularly in
the context of China? The dearth of attention to these questions
informs us a more integrative understanding of environmental
4 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469

Table 1
Basic statistic descriptions of key variables.

Variable Definition Source Mean S.D. Min Max

agei;j Age (year) CLDS 43.83 14.56 5 96

genderi;j Gender CLDS 0.48 0.5 0 1
marriagei;j Marital status CLDS 0.83 0.37 0 1
partyi;j Social capital CLDS 2.84 0.54 1 3
educationi;j Education (year) CLDS 10.87 3.03 6 22
hourwagepi;j Hourly wage (yuan) CLDS 33.55 77.60 0 583.33
urbani;j Hukou CLDS 0.38 0.48 0 1
danweii;j Ownership CLDS 2.82 0.44 1 3
pgdpj PGDP (yuan) CCSY 56283.12 28720.36 10931 167204
erchanj Share of secondary industry in GDP (%) CCSY 0.51 0.11 0.2 0.89
sanchanj Share of tertiary industry in GDP (%) CCSY 0.4 0.12 0.1 0.8
innervionj City innovation index CCSY 25.93 94.06 0.01 849.06
kpj Capital stock per capita (10,000 yuan) CCSY 13.39 9.16 1.38 75.45
empdensityj Employment density per km2 CCSY 212.80 332.70 5.44 4502.90
dustj Industrial dust emission per km2 (ton) CSYE 4.66 6.89 0.08 119.53
pwaterj Industrial wastewater emission per km2 (ton) CSYE 11054.78 16994.33 101.83 210128.3
SO2j Industrial sulfur dioxide emission per km2 (ton) CSYE 7.49 10.24 0.03 129
PM25j PM2.5 concentration (mg/m3) SEDAC 37.02 17.34 7.11 81.7

Note: i denotes an individual, j denotes a city. Social capital is represented by individuals’ political identity (member of Communist Party of China ¼ 1, member of non-
Communist parties ¼ 2, person with no political affiliation ¼ 3), education denotes years of formal education (as this survey only provides the education level without
specific years of schooling, we follow Barro and Lee (2001), assigning 6, 9, 12, 15, 16, 19, and 22 to elementary school, junior middle school, senior middle and vocational school
and specialized secondary school, polytechnic college, bachelor; postgraduate; and PhD, respectively), and ownership indicates the ownership of one’s working unit
(1 ¼ government and party agencies; 2 ¼ state and collectively owned public service unit, state holding or solely state-owned units, and collective holding or solely collective
owned units; 3 ¼ private holding or solely private owned enterprises, solely foreign owned units, joint ventures controlled by foreign companies or the state, self-employed
individuals, and other enterprises). PGDP is measured in constant 2003 GDP index. City innovation index denotes the city innovation ability from Kou and Liu’s (2017) report
on city and industrial innovation in China. The capital stock per capita is calculated according to Ke and Xiang’s (2012) method, which is deflated by the GDP deflator (2003 as
the base year). The employment density is calculated by the ratio between total employment and total land area of each city. City characteristic variables are all logarithmically
transformed in order to avoid the nonnormality and heteroscedasticity. CCSY and CSYE are the abbreviation of China City Statistical Yearbook and China Statistical Yearbook on
Environment, respectively.

pollution, health, and income inequality is indispensable.
3. Data sources and summary statistics
The dependent variable is the individual income obtained from
CLDS in this study, which is sponsored by the Center for Social
Survey at Sun Yat-Sen University (CSS). The survey was conducted
initially in 2012, and three waves have been released (i.e.,
CLDS2012, CLDS2014, and CLDS2016 for 2011, 2013, and 2015,
respectively) in the form of an urban and rural community biennial
tracking survey that monitors the changes in social structure, labor
force, and family and the interplay between them (CSS, 2017).1
CLDS focuses on the status quo and changes of labor force in
China, its participants come from 29 provinces (excluding Hong
Kong, Macao, Taiwan, Tibet, and Hainan), who are all aged 15 to 64.
We use the hourly wage to represent an individual’s income level,
which is deflated by CPI with 2003 as the base year after a 99%
winsorization transformation in order to reduce the effect of
possibly spurious outliers. As we only focus on individuals’ working
income, samples whose answer is “unclear” to job condition
question are dropped. The demographic characteristics also come
from CLDS including age, gender, marital status, social capital, ed-
ucation, Hukou, and ownership of working unit, the specific in-
structions of variables used in this study can be found in Table 1.
Since particulate matter is a common proxy indicator for air
pollution, which to a large extent, contributes to China’s significant
health risks, especially cardiovascular and respiratory diseases
(Zhao et al., 2019). As such, PM2.5 had been the major air pollutant
in Chinese cities (Zheng and Kahn, 2017), which, at some degree,
could be the best measure to represent the level of health risks
caused by air pollution (Freeman et al., 2019). Previous works on air
pollution in China generally provided empirical evidence based on
the Air Pollution Index (API) and PM10 data released by the Min-
istry of Ecology and Environment, China. However, these data are
only available for large and medium-sized cities, and local gov-
ernments are motivated to manipulate them for career advance-
ment (Ghanem and Zhang, 2014). Therefore, PM2.5 satellite data
from the socioeconomic data and applications center (SEDAC) at
Columbia University2 are used in our research. The annual mean
level of PM2.5 at the city level is collected through ArcGIS 10.5
based on SEDAC. These data were weighted based on the popula-
tion of each district to fully reflect the situation of PM2.5 exposure
for all cities in China. Fig. 2 illustrates the changes in satellite PM2.5
data during 2003e2016, which shows that the PM2.5 concentra-
tion has decreased in most regions, except for Xinjiang, North and
Northeast China. This suggests the uneven distribution of air
pollution in China. For robustness testing, we also use industrial
dust, wastewater, and sulfur dioxide from the China Statistical
Yearbook on Environment.
Moreover, we also introduce city-characteristic variables into
our empirical model, including the gross domestic product per
capita (PGDP), share of secondary and tertiary industry in GDP, city
innovation index, capital stock per capita, and employment density
based on the China City Statistical Yearbook, which covers 288, 290,
and 291 cities of China in 2011, 2013, and 2015 respectively.
Therefore, the observations whose residential city is not covered by
these cities will be dropped. After excluding observations with

2
See https://sedac.ciesin.columbia.edu/data/sets/browse#opennewwindow for
1
See Wang et al.’s (2017) research for more information about the CLDS dataset. more information and the SEDAC dataset itself. Accessed Dec 11, 2019.
 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469
Fig. 2. Increase in PM2.5 between the period 2003e2009 and 2010e2016 for each city in China (mg/m3).
Notes: Data comes from SEDAC.
missing essential information, we collect valid samples in a total of
26,218 households nested within 218 prefecture-level cities. The
geographical distribution of these 218 cities is illustrated in Fig. 2.
PM2.5 satellite data at the city level allows for the estimation of
the heterogeneous effects of air pollution on individual income of
people of different SES, which reflects the change in inequality at
the individual level out of air pollution. Table 1 presents summary
and descriptive statistics of variables involved in this research.
3.1. Econometric model
Similar to other studies using individual- and city-level data, we
attempt to use two-level nested data, that is, data involving income
and SES at individual-level and air pollution and socioeconomic
development status at the city-level, to analyze the effect of air
pollution on income inequality from the perspective of health.
However, traditional linear models can be used after meeting
four preconditions: linearity, normal distribution, variance homo-
geneity, and independence. While the nested data generally do not
satisfy variance homogeneity and independence (de Leeuw and
Kreft, 1986), traditional linear models are not well suited in this
case (Zhang et al., 2018). In view of the advantages of the HLM in
processing multi-level data, this study adopted a HLM to conduct
the empirical analysis. This model combing the ordinary least
square (OLS) method with weighted least square (WLS) method to
deal with statistics that including micro-level and macro level, thus
it is “more effective in addressing correlations and imbalances
between statistics and panel data deficiency issues” (Cao et al.,
2016, p. 148).
We first decompose the income gap into two parts:
5
interregional and intra-regional gap, which can be achieved by the
HLM null model, as shown in Eq. (1):


Level 2: q0j ¼ ε00 þ m0j ; with Var m0j ¼ t00 (1)
Where the dependent variable lnhourwage1pi;j of level 1 de-
notes the log of hourly wage of individual i in city j. q0j and di;j
indicate the mean level of individual income and the random dif-
ference among individuals, respectively. ε00 represents the average
level of income at the city level, and m0j represents a random dif-
ference among cities. In order to estimate the ratio of between-
group variance to the total variance, the intra-class correlation
coefficients (ICC) of the city level could be calculated in Eq. (2):
. 
ICC ¼ t00 t00 þ s2 (2)
If ICC > 0.059, the mean income level is not independent at the
city level (Cohen, 1988), implying the existence of the differences
between groups. In this study, the value of ICC is 0.190, which
suggests that the unevenly distributed air pollution might be an
important determinant of the income gap between areas. There-
fore, a HLM is necessary. Based on the null model, we add
contextual variables of levels 1 and 2 into it, including age, gender,
marital status, social capital, education, Hukou, and job at the in-
dividual level and pollution concentration and city characteristic
variables at the city level. Then, we develop a two-level mixed ef-
fect model in Eq. (3):
Level1:
6 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469

Table 2
Basic regression results.

Models Model1 Model2 Model3 Model4

lnhourwagepi;j ¼ q0j þ q1j marriagei;j þ q2j partyi;j þ q3j educationi;j
lnp 0.3133*** 0.4050*** 0.2981*** 0.3752***
þ q4j urbani;j þ q5j danweii;j þ q6j agei;j þ q7j age2i;j þ q8j genderi;j (0.0633) (0.0766) (0.0631) (0.0761)
lnp_lag 0.1599** 0.1365*
þ gTIME þ di;j (0.0761) (0.0760)
lnpgdp 0.1225 0.0747 0.0791 0.0519
(0.1307) (0.1320) (0.1303) (0.1307)
lnkp 0.0626 0.0395 0.0324 0.0184
Level2: (0.0937) (0.0938) (0.0934) (0.0928)
lninnervion 0.0481 0.0507* 0.0560* 0.0606**
(0.0293) (0.0291) (0.0292) (0.0290)
lnempdensity2 0.0606 0.0513 0.0511 0.0518
q0j ¼ ε00 þ ε01 lnpj þ ε02 lnp lagj þ ε03 lnpgdpj þ ε04 lnkpj (0.0396) (0.0396) (0.0395) (0.0393)
lnerchan 0.3319 0.3424 0.2191 0.2526
þ ε05 lninnervionj þ ε06 lnempdensity2j þ þε07 lnerchanj (0.2272) (0.2259) (0.2263) (0.2233)
lnsanchan 0.4862** 0.5191*** 0.3915** 0.4442**
þ ε08 lnsanchanj þ m0j (0.1912) (0.1913) (0.1909) (0.1904)
party 0.0967*** 0.0976*** 0.0954*** 0.0966***
(0.0123) (0.0123) (0.0123) (0.0123)
q1j ¼ ε10 lnp*party 0.0255 0.0215
(0.0232) (0.0798)
q2j ¼ ε20 þ ε21 lnpj þ ε22 lnp lagj lnp_lag*party 0.0489
(0.0814)
education 0.0802*** 0.0793*** 0.0792*** 0.0784***
q3j ¼ ε30 þ ε31 lnpj þ ε32 lnp lagj (0.0030) (0.0030) (0.0030) (0.0030)
lnp*education 0.0274*** 0.0566***
(0.0054) (0.0174)
q4j ¼ ε40 þ ε41 lnpj þ ε42 lnp lagj lnp_lag*education 0.0315*
(0.0179)
urban 0.2016*** 0.2012*** 0.1845*** 0.1790***
q5j ¼ ε50 þ ε51 lnpj þ ε52 lnp lagj (0.0224) (0.0224) (0.0224) (0.0226)
lnp*urban 0.2366*** 0.4695***
(0.0460) (0.1229)
q6j ¼ ε60 lnp_lag*urban 0.2610**
(0.1244)
danwei 0.1014*** 0.1024*** 0.0952*** 0.0977***
q7j ¼ ε70 (0.0172) (0.0172) (0.0172) (0.0172)
lnp*danwei 0.0356 0.0534
(0.0338) (0.1117)
q8j ¼ ε80 lnp_lag*danwei 0.0173
(0.1136)
age 0.0540*** 0.0538*** 0.0533*** 0.0537***
(0.0042) (0.0042) (0.0042) (0.0042)
age2 0.0007*** 0.0007*** 0.0007*** 0.0007***
g ¼ p01 þ m1j (3) (0.00005) (0.00005) (0.00005) (0.00005)
gender 0.3123*** 0.3133*** 0.3147*** 0.3159***
Where lnpj denotes the log of air pollution concentration in city j, (0.0136) (0.0136) (0.0135) (0.0136)
marriage 0.1236*** 0.1236*** 0.1265*** 0.1263***
and lnp lagj represents the value with one year lagged of it,3 TIME
(0.0224) (0.0224) (0.0223) (0.0223)
denotes the time variable (2011 ¼ 0, 2013 ¼ 1, and 2015 ¼ 2), q0j and Constant 2.4122*** 2.4047*** 2.4043*** 2.3965***
q1j eq8j , g are the intercept and slope, respectively, of city j in the (0.0467) (0.0467) (0.0467) (0.0468)
first layer; ε00 -ε80 , p01 are the average values for q0j eq8j, g Observations 31,519 31,519 31,519 31,519
respectively, as well as their fixed parts implying that they are Note: *** p < 0.01, ** p < 0.05, * p < 0.1, robust standard errors in parentheses.
constant among the city variables; ε01 eε08 , and ε22 eε52 are Independent variable is Log(annual mean PM2.5) and its lagged value (indicated by
regression coefficients; m0j and m1j are random elements of q0j and “_lag”).

g, respectively, representing the difference between cities. di;j is the

error term, and age2i;j denotes quadratic term of age. g allows us to
4. Results and discussion
extend the random intercept model to allow both the intercept and
the slope of time to vary randomly across cities.
4.1. Main results
Before the empirical analysis, we need to take account of
centering to ensure the slope coefficients are meaningful. The
As shown in Table 2, we estimate the effects of air pollution on
grand mean centered model that center explanatory variables
individual income using the HLM model. The dependent variable is
around the overall mean contributes to removing high correlations
the logarithm of hourly wages in Model1eModel4. Model1 and
between the random intercept and slopes, as well as reducing
Mosel2 show the results without interactions between air pollution
correlations between the first- and second-level variables and
and the SES variables, Model2 and Model4 show the results with
cross-level interactions (Hox, 2002). Therefore, the independent
the one-year lagged air pollution. These results confirm the sig-
variables in level 1 and 2 are all centered around the overall mean.
nificant and robust effects of air pollution on individual income.4

3
Considering that the health effects of air pollution may be triggered after a
4
period of exposure, particularly for people with office-based job, thus we add one- The original regression data and the corresponding estimation codes are
year lagged air pollution concentration into our model. available upon request.
 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469
The current air pollution has a positive effect on individual in-
come due to the production effect of air pollution, which is
consistent with Yang and Sheng (2012). A 1% increase in PM2.5
induces a rise in income of 0.30e0.31%. By contrast, the estimates of
the one-year lagged air pollution concentration show a negative
impact, a 1% increase in one-year lagged PM2.5 brings in a reduc-
tion in income of 0.14e0.16%. The increase in current air pollution
generally implies production expansion, which would bring in
more jobs and a rise in labor productivity. At the same time, air
pollution also exposes people to polluted air, although the
contemporaneous pollution shocks in PM2.5 may have little
detectable impacts on individuals’ health condition or human
capital investment; however, these negative effects will become
more obvious in the long run due to the reduced law of marginal
profit (Yang and Sheng, 2012).
The coefficients on city-specific variables show that per capita
capital stock exerts an insignificant effect on individual income, as
the innovation ability of a city is positively related to individual
income. The positive correlation between the innovation ability of a
city and air pollution suggests that high-skill industries contribute
to a rise in income due to their higher value-added products, while
the negative correlation between employment density and air
pollution implies that a higher employment density implies greater
labor market competition, which leads to lower wages and higher
living costs (Chen et al., 2008). Moreover, the share of secondary
and tertiary industries are positively related to individual income,
especially the share of the tertiary industry, which is consistent
with Peneder (2003).
The HLM model also reports the heterogeneity of air pollution
effects on individual income across different SES, which is an
advantage of the HLM model over other methods (Zhang et al.,
2018). These results are represented by the coefficients on inde-
pendent variables of level 2 nested within the independent vari-
ables of level 1.
In terms of social capital, the regulating effects of social capital
on income may not be demonstrated in the short term. This is
consistent with Qi and Lu’s (2015) research, suggesting the cumu-
lative impact of social capital.
The coefficients on interaction between air pollution and edu-
cation show that individuals with lower education levels benefit
more from the production effect of current pollution shocks in
PM2.5, as their share in pollution-intensive industries is relatively
high. Thus, the income gap between high and low education levels
may be narrowed in the short run (Krueger and Lindhal, 2001),
while the coefficients on the interaction between one-year lagged
air pollution and education show this trend to be inconsistent. This
is mainly because individuals with higher education levels have
better access to knowledge and strategies about avoiding pollution
and prefer environmental quality, which are all conducive to their
health as well as human capital accumulation in the long term.
Income inequality will be aggravated by the accumulative effect of
human capital (Chakraborty and Das, 2005). Consequently, a
greater human capital inequality will lead to greater income
inequality.
Similarly, the current air pollution also has heterogeneous ef-
fects on urban and rural residents; specifically, the marginal output
of pollution is higher in rural regions, where residents experience
more rapid income improvement. However, public services and the
public investment in human capital attached to an urban Hukou
will play a role in the long run (Chan, 2009). Individuals with an
urban Hukou have more access to human capital-related public
services, which will shield them from the adverse impacts of air
pollution.
Finally, there is a positive interaction between air pollution and
the ownership of working units in the short term. That is, low- and
7
middle-level occupational groups benefit more from the produc-
tion effect of current air pollution due to their higher proportion in
pollution-intensive industries according to China Statistical Year-
book. However, the coefficients on interaction between one-year
lagged air pollution and ownership suggest that high-level occu-
pational groups have a relatively low possibility of exposure to
ambient air pollution, and have advantages over low- and middle-
level occupational groups in human capital accumulation in the
long run.
These results suggest the existence of environmental inequality,
that is, individuals of lower SES usually face disproportionate harm
due to the lack of avoidance means and low level of human capital.
Boyce et al.‘s research (2016) also confirms this conclusion.
The above results show that individuals of lower SES benefit
more from current air pollution due to the production effect of air
pollution. However, air pollution will further aggravate the income
inequality across individuals of different SES in the long term.
Considering the potential heterogeneity in the pollution effect
across regions and industries, we also conduct regressions for
different areas and industries (see Table A1), most results change
little compared to the baseline ones, confirming the robustness of
our estimation.
4.2. Robustness checks
In view of the correlation between poor environmental quality
and low income, people of lower SES usually have no access to high
quality residential environments (Graff Zivin and Neidell, 2013).
Moreover, economically active cities that can offer highly paid jobs
generally at the expense of environmental degradation of their
residential places, thus the reverse causality should be considered.
Several robustness checks to the baseline results in Table 2 are
reported in Table 3. The results are robust to different model
specifications, sample restrictions, or alternative independent
variables.
The negative effect of one-year lagged air pollution on individ-
ual income has been reversed with respect to the other pollutants
in Model8e10, and the interactions between pollutants and so-
cioeconomic variable are insignificant. One possible cause is that
the statistics of industrial pollutants emission only cover industrial
enterprises without domestic pollutants. Additionally, official in-
dustrial pollutants emission data may be manipulated by local of-
ficials out of advancement assessment (Chen et al., 2012; Ghanem
and Zhang, 2014), some of them initiatively help local enterprises
escape from environmental regulation to maintain GDP growth
(Agarwal et al., 2019). Therefore, there exists a downward bias
compared with the actual situation. We also added two-year lagged
industrial pollutants into our models, and their coefficients decline
in magnitude and significance.
Further, we changed our model from HLM to OLS and two-stage
least squares (2SLS); the results are presented in Table A2, in which
Model1-Model4 are based on OLS, and Model5eModel7 are based
on 2SLS. The potential problem of missing variables, reverse cau-
sality, and measurement error may lead to endogeneity, which
would weaken the robustness of estimating results. 2SLS, as a
widely used instrumental variable estimation method, is an effec-
tive tool to handle this problem. Therefore, here we used it to
further examine the robustness of our results. With respect to the
2SLS model, we instrumented air pollution using the logarithm of
the mean Air Quality Index (lnAQIa) and the share of days that the
AQI100 within a year (AQIfr). In the short term, these two in-
dicators are orthogonal to the individual income level, but highly
correlated with PM2.5, thus meeting the requirement of instru-
mental variables. The results are very similar to the baseline ones.
8 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469

Table 3
Robustness checks.

Models Model1 Model2 Model3 Model4 Model5 Model6 Model7 Model8 Model9 Model10

Excluding Sub- Excluding Excluding AQIa as the AQIfr as the year-on-year 5-year average Industrial Industrial Industrial
provincial and high Xinjiang independent independent growth rate of concentration of wastewater dust SO2
above cities polluters Province variable variable PM2.5 PM2.5 emission emission emission

lnp 0.3886*** 0.3770*** 0.3347*** 0.2084*** 0.2735** 0.0037*** 2.2124*** 0.0526** 0.0471* 0.0074
(0.0816) (0.0773) (0.0786) (0.0547) (0.1239) (0.0007) (0.5051) (0.0210) (0.0246) (0.0154)
lnp_lag 0.1505* 0.1196 0.0792 0.0069 0.3777*** 0.0050*** 2.1653*** 0.0599*** 0.1596*** 0.0833***
(0.0816) (0.0768) (0.0783) (0.0694) (0.1227) (0.0012) (0.5077) (0.0207) (0.0258) (0.0207)
lnp*party 0.0186 0.0183 0.0213 0.0050 0.1706 0.0007 0.2569 0.00004 0.0138 0.0050
(0.0879) (0.0806) (0.0829) (0.0438) (0.1212) (0.0009) (0.5045) (0.0190) (0.0215) (0.0180)
lnp_lag*party 0.0027 0.0523 0.0472 0.0025 0.0617 0.0011 0.2822 0.0027 0.0150 0.0066
(0.0887) (0.0818) (0.0861) (0.0575) (0.1124) (0.0014) (0.5034) (0.0180) (0.0213) (0.0180)
lnp*education 0.0640*** 0.0572*** 0.0639*** 0.0490*** 0.1489*** 0.0005** 0.3722*** 0.0026 0.0040 0.0043
(0.0188) (0.0175) (0.0177) (0.0109) (0.0287) (0.0002) (0.1147) (0.0043) (0.0050) (0.0038)
lnp_lag*education 0.0361* 0.0322* 0.0334* 0.0187 0.1108*** 0.0001 0.3489*** 0.0018 0.0008 0.0033
(0.0192) (0.0180) (0.0184) (0.0123) (0.0268) (0.0003) (0.1148) (0.0041) (0.0049) (0.0040)
lnp*urban 0.4223*** 0.4957*** 0.5844*** 0.0715 0.0352 0.0039*** 1.0042 0.0564* 0.0100 0.0644**
(0.1341) (0.1239) (0.1269) (0.0766) (0.2204) (0.0014) (0.8263) (0.0314) (0.0405) (0.0269)
lnp_lag*urban 0.1748 0.2665** 0.3715*** 0.2028** 0.4335** 0.0008 0.8111 0.0174 0.0375 0.0026
(0.1331) (0.1248) (0.1317) (0.0939) (0.2049) (0.0022) (0.8220) (0.0300) (0.0392) (0.0287)
lnp*danwei 0.1278 0.0388 0.0099 0.0843 0.3608** 0.00003 0.8427 0.0317 0.0181 0.0388
(0.1273) (0.1127) (0.1161) (0.0638) (0.1716) (0.0013) (0.6882) (0.0276) (0.0314) (0.0243)
lnp_lag*danwei 0.0899 0.0069 0.0946 0.0885 0.0635 0.0010 0.8026 0.0019 0.0032 0.0031
(0.1271) (0.1141) (0.1217) (0.0811) (0.1624) (0.0020) (0.6860) (0.0261) (0.0307) (0.0250)
Observations 27,959 30,640 30,189 22,773 22,773 31,519 31,519 31,424 30,305 31,099

Notes: *** p < 0.01, ** p < 0.05, * p < 0.1, robust standard errors in parentheses. Independent variable is Log(annual mean PM2.5) in Model1eModel3, Log(mean Air Quality
Index) in Model4, the share of days that the AQI100 within a year in Model5, year-on-year growth rate of PM2.5 in Model6, Log(the 5-year average concentration of PM2.5) in
Model7, Log(Industrial wastewater emission) in Model8, Log(Industrial dust emission) in Model9, and Log(Industrial SO2 emission) in Model10. Sub-provincial and above
cities are excluded in Model1, high polluter (Hebei Province) is excluded in Model2, Xinjiang Province is excluded in Model3 out of concerns about the influence of major cities
in pollution policy placement of plants or being outliers in terms of pollutants (Khanna et al., 2019). Time Control, City controls, and demographics controls are also included
that are consistent with Table 2.

5. Mechanism testing X
inequalityit ¼ a20 þ b21 pollutionit þ b22 Xit þ di þ rt þ fit
The theoretical and empirical analysis above shows that air
(5a)
pollution exacerbates the income inequality among individuals of
different SES through health. As one of the most important aspects X
of human capital, health needs to be given more attention. On the inequalityit ¼ a30 þ b31 pollutionit þ b32 healthit þ b33 Xit þ di
one hand, the health burden attributable to air pollution exerts a
þ rt þ fit
disproportional effect on income, and those of higher SES have
access to more measures and strategies to avoid the adverse effects (5b)
of air pollution, which consequently leads to health inequality that
X
has a close connection with income inequality. On the other hand, pollutionit ¼ a40 þ b41 inequalityit þ b42 Xit þ di þ rt þ fit
health inequality, to some degree, results in individuals of different
SES vary in the accumulation of human capital and the investment (6)
in the human capital of their children, which ultimately leads to an
Where healthit denotes the overall health level of province i in
increasingly widening income gap. This section will test this
period t, here we use a frequently-used indicator in Health Pro-
mechanism.
duction Function to measure it: life expectancy (life).5 pollutionit
Due to the dearth of income inequality data at the city level, we
measures a composite index of four industrial pollutants (i.e., in-
examine whether the health channel through which air pollution
dustrial wastewater, industrial dust emission, industrial SO2 emis-
exerts influence on income inequality exists based on panel data at
sion, and industrial waste gas emission) in each province through
the province level from 2000 to 2015. We constructed a simulta-
the entropy method (Wang et al., 2015). inequalityit measures the
neous system of equations to examine the health channel of air
income inequality of each province.
pollution. Out of concern for endogeneity and bidirectional cau-
Consistent with previous study, the Gini coefficient of house-
sality, besides the connection between different equations is
hold disposable income is used to measure the income inequality
neglected in single equation estimation, we construct a full infor-
(Gini) that is calculated by applying a quintile rule (Fang et al.,
mation estimation to address this problem. Moreover, in view of
2013), we also add the ratio of disposable income per capita be-
the advantages of 3SLS that combines 2SLS and Seemingly Unre-
tween urban and rural households (incomegap) as the alternative
lated Regression Estimation (SUR), we use a 3SLS model to estimate
income inequality indicator to check the robustness of the main
this simultaneous system of equations:
results. Besides, we also include province characteristics controls
X (Xit ) such as the proportion of aged 65 and above (65plus), medical
healthit ¼ a10 þ b11 pollutionit þ b12 inequalityit þ b13 Xit þ di
technical personnel in health care institutions per 10,000 persons
þ rt þ fit
(4)
5
The China Statistical Yearbook does not cover the life expectancy of each
province, we calculate it according to the research of Yang and Zhang (2013).
 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469
(tech), per capita GDP measured in constant 2000 GDP index (pgdp),
education (edu), the proportion of urban residents (urban), per
capita general public budget expenditure (pinvest), the ratio be-
tween total imports & exports and GDP (imex), the share of second
industry (second), the granted patents per 10,000 population
(patent), and energy intensity by GDP (fuel). Our estimates also
include province (di ) and year (rt ) fixed effect. All data during
2001e2016 collected from China Environment Yearbook, China Ed-
ucation Yearbook, China Statistical Yearbook, and statistical year-
books of each province. In view of the nonnormality and
heteroscedasticity of variances, province characteristics variables
are logarithmically transformed.
In order to examine the health channel through which air
pollution exerts influence on income inequality, we capture the
change in the coefficient on pollutionit before and after adding
healthit to the model, that is, the change from b21 to b31 . Table A3
reports the estimates of the simultaneous equations based on
3SLS, according to the mediator test method proposed by Baron and
Kenny (1986) and Zhao et al. (2010), mediators can be explained by
independent variables and dependent variables can be explained
by mediators. Therefore, there exists a complete mediation if the
correlation between independent and dependent variables be-
comes insignificant after controlling for mediators, or a partial
mediation if the correlation is still significant. Consistent with our
expectations, the magnitude of the effect of air pollution on income
inequalitydwhether using the Gini index or the urban-rural in-
come gapddecreases or becomes insignificant after controlling for
health, that is, the health channel exists. These findings confirm our
hypothesis that air pollution aggravates the income inequality
among individuals of different SES through the health channel.
6. Conclusion and policy implications
This paper uses a HLM model for the empirical analysis and
considers both the short- and long-term effects of air pollution on
individual income, which allows for a comprehensive under-
standing of the income effect of air pollution. Moreover, the HLM
model enables us to compare the heterogeneity of the income ef-
fect of air pollution across individuals of different SES. Using data
on 218 cities from CLDS2012, CLDS2014, and CLDS2016, combined
with city-specific characteristic variables and PM2.5 satellite data
instead of traditional official air pollution data. We show there
exists a positive production effect of current air pollution on indi-
vidual income, but this effect is inconsistent in the long run. If air
pollution concentration increases by 1%, long-term income would
reduce by 0.14e0.16%. Additionally, individuals of lower SES are
confronted with a heavier health burden in the long term, which
exacerbates the income gap between them and people of higher
SES. We further examine the robustness of our findings, the results
provide further evidence for the negative long-run income effects.
We also hypothesize that health human capital could be an
important channel by which air pollution exacerbates the income
inequality based on Constant’s (2019) work. The underlying
mechanism stems from the negative effect of pollution on health,
which discourages investments in human capital, such as education
(see Fig. 3). In Section 6, the results of mechanism testing based on
a 3SLS model suggest that this channel exists.
Understanding how air pollution affects income inequality at
the individual level is essential for crafting efficient environment
policies to alleviate the negative effects of air pollution brings on
income distribution. As such, we make the following policy rec-
ommendations for dealing well with the incomeepollution nexus
and for balancing air quality improvement and income equality.
First, the government should make a comprehensive assess-
ment of the health burden distribution due to environmental
9
pollution on individuals of different SES, and then define a
reasonable share of the health cost of pollution among residents,
enterprises, and government. Residents should learn to save energy
and protect the environment, ultimately changing their attitudes
toward “green consumption.” As for enterprises, they should raise
their awareness of “green manufacturing” and phase out backward
production capacities for long-term development. They could take
stricter environmental regulations as opportunities for trans-
formation and escalation, based on which they could seize the
initiative in new markets. With respect to the government, there
are a number of ways for reducing the pollution cost, including
more efforts to promote environmentally friendly and resource-
saving technological innovations, increasing investment in envi-
ronmental science and technology-related basic research, and ul-
timately building a new environmental technical service-oriented
system for enterprises and households.
Second, it is important to promote equal access to basic public
services, especially healthcare and education ones. The government
should provide a minimum living guarantee for residents who re-
turn to poverty by illness attributable to environmental pollution. It
is also necessary to set a binding minimum environmental quality
standard to satisfy people’s basic health needs. Encouraging more
people to work in the social healthcare system through preferential
policies and better treatment will be an efficient solution to the
limited medical resources. In addition to healthcare, attention
should be paid to education. The increase in the number of
schooling years will be conducive to a better understanding of
avoidance strategies, particularly for those who live in rural areas.
Further, better education encourages people to adopt healthier
lifestyle and increases more access to avoidance-related informa-
tion. The benefits of education could have an intergenerational
effect on children’s health differential (Eriksson et al., 2014), which
plays an important role in eliminating the urbanerural differences.
In addition to the improvement of the soft environment, attention
should also be paid to the promotion of environmental protection
facilities (e.g., air pollution monitoring network across the country).
Third, the regional disparity in terms of socioeconomic devel-
opment and differences among income groups should be consid-
ered in the environmental policymaking process. On the one hand,
developed areas should play a leading part in environmental
governance and the improvement of income distribution. Hetero-
geneous policies on energy saving and emission reduction should
be applied to different regions to eliminate the pollution inequality
among them. Given the different convergence speed of per capita
air pollution emissions among regions (Hao et al., 2015), such
regulations could be tight for cities with higher pollution intensity
and more relaxed otherwise. Furthermore, the local governments
of developing regions should promote industrial upgrading and
restructuring and break the path dependence of pollution-
intensive industries to avoid becoming pollution havens. These
improvements may reduce the economic growth rate in the short
run, but their positive externalities (e.g., higher labor productivity)
will eliminate the discrepancies between developing and devel-
oped regions in the long run. On the other hand, strengthening the
responsibility of the rich in terms of environmental protection is
also important, such as by levying a progressive environmental
pollution tax linked to the income level. Increasing the income of
rural residents will directly spur investment in their health and
narrow the gap between them and urban residents in terms of
health human capital.
Last, the government should further improve the compensation
and assistance mechanisms for health damage caused by environ-
mental pollution. Specifically, those directly responsible for health
issues due to pollution should pay compensation according to the
polluter pays principle. Moreover, an environmental litigation
10 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469

Fig. 3. The theoretical mechanism of air pollution on income inequality.

Notes: The boldness of the line indicates the strength of influence.

system and pollution compulsory insurance could be strong safe- relationship with income inequality should be analyzed in the
guards for the implementation of this mechanism. For those future. These estimation results also remind us of taking more in-
damages without clear causes or victims of lower SES, an aid fund tegrated measures that take income and environment quality into
should be established. The negative effects of manufacturers’ account simultaneously to reduce poverty and air pollution
pollution on their employees and surrounding residents’ labor together in China.
productivity remains a neglected topic in previous studies. As such,
it’s necessary to take this adverse impact into consideration in the
environmental policymaking process to protect laborers’ rights and
CRediT authorship contribution statement
interests. Meanwhile, the increase of labor productivity due to
environmental improvement is also conducive to enhancing the
Feng Liu: Writing - original draft, Conceptualization, Method-
operational efficiency of manufacturers.
ology. Meina Zheng: Writing - review & editing, Visualization.
Our analysis provides new insights into the effect of air pollution
Meichang Wang: Data curation, Software.
on income inequality through health. Since the literature has not
reached conclusive results on the incomeepollution nexus either
theoretically or empirically (Wu et al., 2019), future research into
this area should develop more reasonable dynamic models on the Declaration of competing interest
joint evolution of income growth and environmental pollution to
unpack the mechanisms driving them. In addition to PM2.5, the The authors declare that they have no known competing
level of the health burden due to other types of pollutants and their financial interests or personal relationships that could have
appeared to influence the work reported in this paper.
 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469 11

Acknowledgements Appendices

This study was supported in part by the “Major Program of

Chinese National Funding of Social Sciences (Grant No. 17ZDA096)”.

Table A1
Heterogeneity in the pollution effects across regions and industries.

(1) (2) (3) (4) (5) (6)

East Middle West First industry Second industry Tertiary industry

lnp 0.2038* 0.3425* 0.2579 0.7629*** 0.1104 0.0041

(0.1082) (0.1987) (0.1633) (0.2273) (0.1049) (0.1017)
lnp_lag 0.1910* 0.0704 0.1491 0.4205* 0.0399 0.0108
(0.1104) (0.1775) (0.1558) (0.2201) (0.1067) (0.1064)
lnp*party 0.0716 0.2144 0.1443 0.0306 0.0884 0.1057
(0.1231) (0.1852) (0.1397) (0.1918) (0.1604) (0.0904)
lnp_lag*party 0.0365 0.2166 0.0628 0.0897 0.1482 0.1386
(0.1374) (0.1781) (0.1345) (0.1945) (0.1691) (0.0914)
lnp*education 0.0913*** 0.0585 0.0678** 0.0216 0.0539* 0.0136
(0.0257) (0.0417) (0.0325) (0.0356) (0.0323) (0.0247)
lnp_lag*education 0.0361 0.0675* 0.0369 0.0368 0.0298 0.0154
(0.0287) (0.0400) (0.0310) (0.0364) (0.0339) (0.0255)
lnp*urban 0.3814** 1.0110*** 0.6349** 1.3169** 0.1532 0.3772**
(0.1610) (0.3192) (0.2587) (0.5174) (0.1800) (0.1555)
lnp_lag*urban 0.3103* 0.1505 0.3819 0.9880** 0.0936 0.3183*
(0.1794) (0.3078) (0.2378) (0.4830) (0.1881) (0.1629)
lnp*danwei 0.1765 0.3982 0.0539 0.7954 0.1371 0.0623
(0.1578) (0.2509) (0.2313) (0.8350) (0.2325) (0.1125)
lnp_lag*danwei 0.0725 0.5212** 0.1940 0.8847 0.0873 0.0861
(0.1783) (0.2394) (0.2133) (0.7763) (0.2454) (0.1154)
Observations 15,040 7473 9006 11,583 6994 10,792

Notes: *** p < 0.01, ** p < 0.05, * p < 0.1, robust standard errors in parentheses. Independent variable is Log(annual mean PM2.5). Time Control, City controls, and De-
mographics are also included, which are consistent with Table 2, their results are also similar to Table 2, which are not reported here due to limited space. Columns 1e3 are
results of subsamples from east, middle and west regions, respectively according to the classification of the National Bureau of Statics. Columns 4e7 are results of subsamples
work in different industries, specifically, column (4) including Agriculture, Forestry, Animal husbandry, Fishery; column (5) including Mining, Manufacturing, Production and
Supply of Electricity, Gas and Water, and Construction; Model6 including Geological prospecting and water conservancy, Transport, storage and post, Wholesale and retail
trades, Finance and insurance, Real estate, Social services, Health, sports and social welfare, Education, culture, and entertainment, Scientific research and technical services,
and Government and party agencies.

Table A2
The estimation of OLS and 2SLS models.

Models Model1 Model2 Model3 Model4 Model5 Model6 Model7

OLS 2SLS

lnAQIa and AQIfr as IV

lnp 0.2309*** 0.8271*** 0.4820** 1.1418* 0.3867*** 0.5429 2.6527

(0.0642) (0.1619) (0.2410) (0.6068) (0.1394) (0.6831) (2.6440)
lnp_lag 0.6571*** 0.6674 3.4869
(0.1984) (0.6634) (3.0246)
lnp*party 0.0266 0.0847 0.1195 0.0929
(0.0258) (0.0763) (0.0866) (0.1894)
lnp*education 0.0262** 0.0303 0.0948** 0.1538
(0.0132) (0.0320) (0.0411) (0.1193)
lnp*urban 0.0670 0.9467*** 0.1066 0.7503
(0.0838) (0.2206) (0.2431) (0.7103)
lnp*danwei 0.0465 0.0423 0.4330 0.0591
(0.0637) (0.1144) (0.2838) (0.6190)
lnp_lag*party 0.1222 0.2104
(0.0840) (0.2662)
lnp_lag*urban 0.9592*** 0.1399
(0.2404) (0.1515)
lnp_lag*education 0.0009 1.1803
(0.0313) (1.0147)
lnp_lag*danwei 0.0019 0.4147
(0.1356) (0.7790)
Observations 31,519 31,519 31,519 31,519 22,773 22,773 22,773
R2 0.1557 0.1595 0.1573 0.1643 0.1684 0.1547 0.1728

Note: *** p < 0.01, ** p < 0.05, * p < 0.1. Standard errors in brackets are clustered on city. All regressions include year-specific fixed effects, city-specific fixed effects, and a
control for individual characteristics.
12 F. Liu et al. / Journal of Cleaner Production 271 (2020) 122469

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