The Effect of Beijing’s Driving Restrictions on Pollution and Economic Activity

65 Pages Posted: 27 Aug 2011 Last revised: 3 Dec 2014

V. Brian Viard

Cheung Kong Graduate School of Business

Shihe Fu

Southwestern University of Finance and Economics - Research Institute of Economics and Management

Date Written: November 18, 2014

Abstract

We evaluate the pollution and labor supply reductions from Beijing’s driving restrictions. Causal effects are identified from both time-series and spatial variation in air quality and intra-day variation in television viewership. Based on daily data from multiple monitoring stations, air pollution falls 22% during every-other-day and 15% during one-day-per-week restrictions. Based on hourly television viewership data, viewership during the restrictions increases by 9 to 17% for workers with discretionary work time but is unaffected for workers without, consistent with the restrictions’ higher per-day commute costs reducing daily labor supply. We provide possible reasons for the policy’s success, including evidence of high compliance based on parking garage entrance records.

Keywords: driving restrictions, externalities, environmental economics, air pollution, commute costs

JEL Classification: H23, D62, L51, J22, R41

Suggested Citation

Viard, V. Brian and Fu, Shihe, The Effect of Beijing’s Driving Restrictions on Pollution and Economic Activity (November 18, 2014). Available at SSRN: https://ssrn.com/abstract=1917110 or http://dx.doi.org/10.2139/ssrn.1917110

V. Brian Viard (Contact Author)

Cheung Kong Graduate School of Business ( email )

Oriental Plaza, Tower E3
One East Chang An Avenue
Beijing, 100738
China
86-10-8518-8858 (Phone)
86-10-8518-6800 (Fax)

HOME PAGE: http://english.ckgsb.edu.cn/faculty_content/brian-viard

Shihe Fu

Southwestern University of Finance and Economics - Research Institute of Economics and Management ( email )

555 Liutai Avenue
Wenjiang District
Chengdu, 611130, Sichuan 611130
China

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