ECONOMIC AND SOCIAL IMPACTS OF AIR POLLUTION: A CAUSAL INFERENCE APPROACH

Abstract

Air pollution remains one of the most pervasive and consequential public health threats of the 21st century. Among various pollutants, fine particulate matter less than 2.5 micrometers in diameter (PM2.5) is of particular concern because its small size al- lows it to bypass natural defenses and penetrate deep into the respiratory system and bloodstream. As such, PM2.5 exerts far-reaching biological and, consequently, social effects. As global urbanization, industrialization, and fossil fuel consumption continue to intensify, PM2.5 exposure poses profound consequences for health, productivity, and economic opportunity. Using high-resolution data from 70,185 census tracts in the contiguous United States, our research investigates the relationship between early-life PM2.5 exposure in 1982 and absolute upward mobility (AUM) 30 years later for children born into low-income families. By applying advanced causal inference techniques—including en- tropy balancing, inverse probability of treatment weighting (IPTW), and generalized propensity score (GPS) matching—the study rigorously adjusts for demographic, so- cioeconomic, and environmental confounders. Our findings reveal a consistent negative relationship: a one-standard-deviation de- crease in childhood PM2.5 exposure is associated with an approximately 4.9% increase in adult AUM. Furthermore, the analysis identifies significant spatial heterogeneity, with certain regions in the South, Midwest, and Pacific disproportionately affected. These results suggest that air pollution acts as a fundamental determinant of oppor- tunity, quietly constraining the life chances of low-income children and reinforcing the need for better air quality monitoring and spatially targeted environmental and social policies.