Calendrier du 04 juillet 2024
brown bag Travail et Économie Publique
Du 04/07/2024 de 12:30 à 13:30
PSE- 48 boulevard Jourdan, 74014 Paris, salle R1-09
CHAMPALAUNE Pascale (PSE)
Wages, City Structure and Air Pollution
Compact, dense cities are more productive and offer higher wages, through agglomeration externalities. They also tend to be seen as more environmentally friendly, as they have lower CO2 emissions per capita. But urban density may also bring about higher local pollution. It can be either be compensated for via higher wages (as a consumption disamenity), or have negative productivity effects, leading to lower wages (as a production disamenity). As such, this paper asks: does local air pollution enhance the urban wage premium, or does it attenuate it? In a first step, I expose a simple cross-city spatial equilibrium, and exploit its structure to provide measures of city-level productivity and amenities. I use French panel data over the 2002-2018 period and a double instrumental variable strategy to tackle endogeneity of urban features and air pollution to estimate the parameters of interest. I find that density does foster fine particulate matter (PM2.5) concentration, and that the latter is indeed a consumption disamenity, but an even stronger production disamenity. I show that this triggers a loss in the wage gains from agglomeration on average. Cities with higher wages offer a larger compensation for air pollution, and as they are also the most populated, the compensation effect dominates at the worker level. There is also marked heterogeneity by skill, as high-skill workers receive larger compensation for air pollution than low-skill ones. All in all, the results suggest that while local air pollution reduces productivity even at low levels, compensation kicks in at higher levels, thus generating spatial wage disparities.