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Information, migration, and the value of clean air

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  • Gao, Xuwen
  • Song, Ran
  • Timmins, Christopher

Abstract

Using a variant of the Rosen-Roback model of inter-city migration that incorporates public access to air quality information, we demonstrate that information constraints create a wedge between revealed and true hedonic prices for pollution that depends upon individuals’ perception biases. We empirically test our theoretical predictions by leveraging the unexpected disclosure of PM2.5 data in China. We find that migration decisions become much more responsive to pollution and that the hedonic price of avoiding PM2.5 exposure nearly doubles – from 171 to 336 Chinese Yuan – in response to the information shock. Our results highlight the role of imperfect information in migration decisions and its impact on non-market valuation in countries where public access to information is restricted.

Suggested Citation

  • Gao, Xuwen & Song, Ran & Timmins, Christopher, 2023. "Information, migration, and the value of clean air," Journal of Development Economics, Elsevier, vol. 163(C).
    • Handle: RePEc:eee:deveco:v:163:y:2023:i:c:s0304387823000342
    DOI: 10.1016/j.jdeveco.2023.103079
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    More about this item

    Keywords

    Information; Migration; Particulate matter; Rosen-Roback; Compensating differential;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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