Negative Traffic Externalities and Infant Health: The Role of Income Heterogeneity and Residential Sorting

Road traffic is associated with a variety of negative externalities such as air pollution and environmental noise, with significant short- and long-run health impacts on infants. This paper empirically quantifies the effects of traffic negative externalities on infant health, focusing especially on how they differ across income groups. We assemble a rich micro-dataset of infant birth outcomes, parental demographics, and neighborhood characteristics to specify and estimate a health model and an equilibrium sorting model. Our results demonstrate that traffic negative externalities reduce birth weights by over two times greater in the lowest-income than in the highest-income families. In addition, the effect of change in income from the poorest to the richest group lifts average birth weights by 0.56% among exposed families, while the income change has no impact on unexposed families. We also find that policies affecting traffic pollution exposure lead to residential sorting. The self-selection of the sorting process causes the lowest-income families to allocate away from neighborhoods experiencing policy-driven environmental improvement, negating the positive benefits of environmental policy. The magnitude of the sorting effect, however, is relatively small.