Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)
Informal environmental regulation of industrial air pollution: Does neighborhood inequality matter?
() and Mathias Moser
Abstract: This paper analyzes if neighborhood income inequality has
an effect on informal regulation of environmental quality, using census
tract-level data on industrial air pollution exposure from EPA’s Risk
Screening Environmental Indicators and income and demographic variables
from the American Community Survey and EPA’s Smart Location Database.
Estimating a spatial lag model and controlling for formal regulation at the
states level, we find evidence that overall neighborhood inequality – as
measured by the ratio between the fourth and the second income quintile or
the neighborhood Gini coefficient – increases local air pollution exposure,
whereas a concentration of top incomes reduces local exposure. The positive
coefficient of the general inequality measure is driven by urban
neighborhoods, whereas the negative coefficient of top incomes is stronger
in rural areas. We explain these findings by two contradicting effects of
inequality: On the one hand, overall inequality reduces collective action
and thus the organizing capacities for environmental improvements. On the
other hand, a concentration of income at the top enhances the ability of
rich residents to negotiate with regulators or polluting plants in their
Keywords: Informal Regulation, Income Inequality, Collective Action, Industrial Air Pollution Disparities, Risk–Screening Environmental Indicators, Spatial Lag Model; (follow links to similar papers)
JEL-Codes: D3,; H4,; Q5,; R2; (follow links to similar papers)
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