Why do people continue to live near polluted sites? Empirical evidence from Southwestern Europe

Poverty is a major determinant for pollution exposure, according to the US location choice literature. In this paper, we assess the impact of poverty on location choices in the European context. Our analysis is based on an original dataset of 1194 households living in polluted and non-polluted areas in three European countries: Spain, Portugal and France. We use instrumental variable strategies to identify the socioeconomic causes of location choices. We show that low education, wealth and income are main reasons for living in polluted areas. However, we also highlight several reasons why intermediate social groups (especially young couples) prefer living in polluted areas, such as greater housing surfaces or non-environmental amenities. Similarly, we show that middle-income households have lower move-out intentions than other income groups, next to households with strong community attachment or long lengths of residence in the area.