U.S. Census Bureau
“Pollution and the Intergenerational Transmission of Human Capital: Evidence from the 1970 Clean Air Act”
Abstract: How do parental endowments shape the economic prospects of their children? Using a newly constructed dataset from the U.S. Census Bureau linking survey, Census and administrative records, we evaluate the effect of early childhood pollution exposure on the long-run effects of the individuals directly affected, as well as the persistence of these effects across generations – exploring the effects of in-utero pollution exposure on the children of those that were in utero exposed. We exploit variation in particulate matter, which sharply dropped following the enactment of the 1970 Clean Air Act Amendments, which we argue allows us to identify these effects as causal. We find that increased early life exposure to particulate matter is associated with significant reductions in the later life earnings of affected individuals, as well as changes in family structure, through an increased likelihood of divorce. In addition, we find evidence that the consequences of this exposure are transmitted across generations. The children of those affected by increased in-utero pollution exposure are less likely to attend college and experience lower earnings. Preliminary evidence on the drivers of the second generation effects point to the importance of economic, as opposed to genetic, channels, highlighting the role that policy could play in equalizing opportunities.