Air Pollution-induced Brain Drain: Evidence from Inventor Mobility

Abstract

This study attempts to examine the impact of air pollution on inventor mobility. Specifically, we find that the number of polluting facilities surrounding inventors’ workplaces significantly affects their mobility. To establish causality, we introduce the NOx Budget Trading Program of 2003 as an exogenous shock and find consistent results. We further demonstrate that the air pollution drives inventors to relocate to areas with better air quality. We present several economic mechanisms underlying our findings, including inventors’ career concerns, knowledge generality, and knowledge complementarity. Finally, we show that the net outflow of inventors negatively affects firms’ innovation outputs.

Keywords: air pollution, toxic emissions, inventor, innovation

JEL Classification: J24, J28, Q53, Q56