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Does Environmental Policy Affect Income Inequality? Evidence from the Clean Air Act

Author

Listed:
  • Akshaya Jha
  • Peter H. Matthews
  • Nicholas Z. Muller

Abstract

This paper quantifies the impact of environmental policy on income inequality. We focus on the Clean Air act and the National Ambient Air Quality standards for fine particulate matter and ozone. Using a matched difference-in-differences estimator, we find evidence that both standards increased inequality in market income and a measure of income that deducts per-capita air pollution damage from adjusted gross income. While pollution standards can reduce pollution levels and thus result in significant environmental benefits in aggregate, our findings suggest that these standards appear to distort the distribution of economic resources in complex, and at times unfortunate, ways.

Suggested Citation

  • Akshaya Jha & Peter H. Matthews & Nicholas Z. Muller, 2019. "Does Environmental Policy Affect Income Inequality? Evidence from the Clean Air Act," AEA Papers and Proceedings, American Economic Association, vol. 109, pages 271-276, May.
    • Handle: RePEc:aea:apandp:v:109:y:2019:p:271-76
    Note: DOI: 10.1257/pandp.20191062
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    Citations

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    Cited by:

    1. Moritz A. Drupp & Ulrike Kornek & Jasper N. Meya & Lutz Sager, 2021. "Inequality and the Environment: The Economics of a Two-Headed Hydra," CESifo Working Paper Series 9447, CESifo.
    2. Nicholas Z. Muller, 2020. "Long-Run Environmental Accounting in the US Economy," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 1(1), pages 158-191.
    3. Liu, Yun & Zhang, Yifei & Yang, Yuxin & Chen, Xin, 2023. "Dark side of environmental regulation: Wage inequality cost," Journal of Comparative Economics, Elsevier, vol. 51(2), pages 524-544.
    4. Sager, Lutz & Singer, Gregor, 2023. "Clean identification? The effects of the Clean Air Act on air pollution, exposure disparities and house prices," LSE Research Online Documents on Economics 115528, London School of Economics and Political Science, LSE Library.
    5. De Santis, R. & Esposito, P. & Lasinio, C. Jona, 2021. "Environmental regulation and productivity growth: Main policy challenges," International Economics, Elsevier, vol. 165(C), pages 264-277.
    6. Luca Spinesi, 2022. "The Environmental Tax: Effects on Inequality and Growth," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(3), pages 529-572, July.
    7. Ohler, Adrienne, 2023. "The Economics of Environmental Health Disparities: Who Benefits from Coal Power Plant Closures?," 2023 Annual Meeting, July 23-25, Washington D.C. 335760, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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