Speaker：Fu Shihe

Time：09:30AM, Friday, November 6,2020

Venue：EMS A221

Abstract：The economic costs of trans-boundary pollution spillovers versus local effects is a necessary input in evaluating centralized versus decentralized environmental policies. Directly estimating these for air pollution is difficult because spillovers are high-frequency and vary with distance while economic outcomes are usually measured with low-frequency and local pollution is endogenous. We develop an approach to quantify local versus spillover effects as a flexible function of distance utilizing commonly-available pollution and weather data. To correct for the endogeneity of pollution, it uses a mixed two-stage least squares method that accommodates high-frequency (daily) pollution data and low-frequency (annual) outcome data. This avoids using annual pollution data which generally yields inefficient estimates. We apply the approach to estimate spillovers of particulate matter smaller than 10 micrograms (PM10) on manufacturing labor productivity in China. A oneμg/m3 annual increase in PM10 locally reduces the average firm’s annual output by CNY 45,809 while the same increase in a city 50 kilometers away decreases it by CNY 16,248. The spillovers decline quickly to CNY 2,847 at 600 kilometers and then slowly to zero at about 1,000 kilometers. The results suggest the need for supra-provincial environmental policies or Coasian prices quantified under the approach.

Introduction to the Speaker:Fu Shihe is a professor at the School of Economics, Xiamen University. In 2005, he received a Ph.D. in economics from Boston College. The main research fields are urban, regional and real estate economics, environmental economics and labor economics. He has published many papers in domestic and foreign academic journals such as Review of Economics and Statistics, Journal of Public Economics, Journal of Labor Economics, Journal of Urban Economics, Journal of Environmental Economics and Management, and "Economic Research". Currently serving as the editor-in-chief of the journal "Chinese Economic Issues".