The impact of air pollution on household vulnerability to poverty: An empirical study from household data in China

Abstract

Understanding the relationship between air pollution and poverty is essential for improving livelihoods and fostering common prosperity. While existing studies have concentrated on the impact of extreme climate and natural disasters on poverty, the adverse effects of air pollution are neglected. Using the China Family Panel Studies (CFPS) from 2016 to 2018, this study investigates air pollution's effect on household vulnerability to poverty, including the mechanisms and heterogeneity. Results shows that air pollution significantly heightens household vulnerability to poverty. This effect stems from air pollution lowering incomes and increasing healthcare burden. Heterogeneity analysis shows that air pollution negatively impacts households with low wealth, poorly educated, weak social networks, and those in developing, non-coastal, and high-terrain cities. Furthermore, air pollution more severely affects households with high consumption volatility and low wealth compared to those with low vulnerability. We also discover that the adverse effects of air pollution on household vulnerability to poverty diminish with increased physical capital. Local governments are encouraged to intensify efforts in reducing emissions through improved environmental regulations, protecting residents from pollution-induced harm.