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Economic Policy Uncertainty and Environmental Inequality:Effects and Mechanisms

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  • Zhonghui Luo
  • Kenji TAKEUCHI

Abstract

This study examines how Economic Policy Uncertainty (EPU) shapes disparities in air pollution exposure across individuals with different levels of education. Using a shift–share instrumental variable based on world import demand to predict provincial EPU fluctuations, we construct an individual-level panel dataset linking personal exposure to EPU and SO2 concentration across six survey waves from 2000 to 2015. The results indicate that a 1% increase in the EPU index leads to an average rise of approximately 1.15μg/m3 in SO2 exposure among individuals without a high school degree, relative to those with one. Mechanism analyses suggest that this effect operates mainly through two channels:changes in government regulatory behavior and in firm-level emission decisions.

Suggested Citation

  • Zhonghui Luo & Kenji TAKEUCHI, 2026. "Economic Policy Uncertainty and Environmental Inequality:Effects and Mechanisms," Discussion papers e-25-011, Graduate School of Economics , Kyoto University.
    • Handle: RePEc:kue:epaper:e-25-011
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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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