DP16700 Escaping Air Pollution: Do Chinese Students and Immigrants Drive Property Prices and Economic Activity Abroad?
We construct a time-series of news coverage about air pollution in China for the period 1977-2019, and verify that such abnormal news coverage is associated with worse air quality in major Chinese cities, for which information is available for a shorter period. We find that that cross-border migration of Chinese citizens, the number of Chinese students going abroad to study, as well as capital flight from China, increase when there is an unexpected increase in air pollution news coverage. We find that U.S. regions with stronger historical ethnic ties to China experience higher property price growth when the “innovation” in air pollution news coverage is higher. We find similar results for residential prices in international cities. Air-pollution driven student inflows increase property prices and employment growth in regions that are major destinations of foreign students. Our study suggests that perception of local environmental and climate risk can have major consequences for the cross-border relocation of capital and labor.
