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Escaping Air Pollution: Immigrants, Students, and Spillover Effects on Property Prices Abroad

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  • Yuk Ying Chang
  • Sudipto Dasgupta

Abstract

We construct a time series of news coverage about air pollution in China for the period 1977–2019. Our measure of abnormal news coverage (ANC) of China’s air pollution is uncorrelated with growth in economic activity or cyclical components of such activity, but strongly correlated with weather-related and atmospheric conditions known to cause air pollution. ANC is associated with more capital flight from China. Focusing on the USA as a destination country, we find that ANC is associated with more Chinese citizens emigrating to US regions with stronger ethnic links to China, and more international students enrolling in US institutions with stronger Chinese student links. US regions with stronger ethnic or educational ties to China experience higher property price growth when ANC is higher. Our study suggests that perception of local environmental risk can have major consequences for the cross-border reallocation of capital and labor.

Suggested Citation

  • Yuk Ying Chang & Sudipto Dasgupta, 2023. "Escaping Air Pollution: Immigrants, Students, and Spillover Effects on Property Prices Abroad," Review of Finance, European Finance Association, vol. 27(5), pages 1699-1741.
    • Handle: RePEc:oup:revfin:v:27:y:2023:i:5:p:1699-1741.
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    File URL: http://hdl.handle.net/10.1093/rof/rfac070
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    More about this item

    Keywords

    Air pollution; China’s air-pollution news; Emigration; Belief revision; Ethnicity; Educational links; Residential property prices;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • G1 - Financial Economics - - General Financial Markets
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • I1 - Health, Education, and Welfare - - Health
    • I2 - Health, Education, and Welfare - - Education
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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