Job Market Paper
Traffic-related air pollution imposes significant short- and long-run health impacts on infants. Environmental policies discouraging traffic affect urban amenity and dis-amenity patters, inducing residential re-sorting. This paper integrates a health model with a structural discrete-choice equilibrium sorting model to empirically measure the effects of such environmental policies as gasoline taxes on infant birth weight. It does so by explicitly accounting for residential sorting and the subsequent housing market adjustments. Results demonstrate that household demand for neighborhood amenity improvements is strongly heterogeneous, suggesting that new policies to improve neighborhood health environments, such as a traffic volume reduction, induce re-sorting. Infants born in areas of high traffic-related air pollution have significantly lower birth weights than others do. Because incomes in the re-sorted landscape differs substantially from these in the pre- sorted landscape, health effects of traffic-related air pollution differ substantially between the two also.