Income, Wealth, and Environmental Inequality in the United States


This paper explores the relationship between pollution exposure, income, wealth, and race by combining administrative data from U.S. tax returns between 1979-2016, various measures of pollution exposure, and sociodemographic information from linked survey and administrative data. In the first year of our data, the relationship between household income and ambient pollution levels nationally is approximately zero for both non-Hispanic White and Black households. However, at every single percentile of household income, African Americans are exposed to, on average, higher levels of particulates than non-Hispanic White households. By 2016, the relationship between income and ambient pollution exposure has steepened, primarily for African Americans, reflecting changes in where rich and poor households live. We utilize quasi-random shocks to income to  examine the causal effect of changes in income and wealth on pollution exposure over a five year horizon, finding that these income-pollution elasticities largely mimic the relationships seen in observational data. Black-White differences in household income explain about 10 percent of the observed gap in pollution exposure by 2016.