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WTO accession, trade expansion, and air pollution:Evidence from China’s county-level panel data
2020-07-04 19:15:00

GDP | Global Development Perspective

Working Paper No. 20.001

Jul.3, 2020

(This paper funded by National Natural Science Foundation of China, Grant/Award Number:71773148,71503281,71703149 and published in Wiley Online Library on 11 May 2020.)

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WTO accession, trade expansion, and air pollution:
Evidence from China’s county-level panel data

Shuai Chen, Faqin Lin, Xi Yao, Peng Zhang

 

Abstract

This study provides evidence that trade expansion has contributed to the degradationof air pollution in China. On the basis of different responses of counties’ trade toChina’s World Trade Organization accession at the end of 2001, we exploit airpollution data from NASA to construct a difference-in-differences predicted trade asan instrument for our identification. We document statistically significant and robustevidence on trade expansion, which accounts for approximately 60% and 20% for theincrease of PM2.5 and SO2, respectively, in China. Findings on trade pollution relationare robust to various tests. Deterioration in the environment is mainly driven by scaleand trade in polluting sectors.

Key words: trade openness; air pollution; instrument variable; China

 

1. Introduction

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2. Data

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3. Empirical strategy

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4. Results

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5. Heterogeneous effects and channel investigation

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6. Conclusion

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