Institute Seminar Series: Socio-economic and health impact of spatial redistribution of pollution: evidence from industrial relocation

Abstract

While relocating polluting industry out of cities is common, its effects on people at both ends of the move are less understood. We study the 2017 relocation of Bangladesh's tannery cluster from its origin in Hazaribagh to a new estate in Savar. Using household surveys from both sites and a difference-in-differences design, we compare changes for more and less exposed individuals. At the destination, employment rose by 3.0 percentage points and earnings by 12 percent, but houses reporting moderate or stronger odor lost 31–38 percent of their value, with suggestive evidence of more respiratory illness and depressive symptoms. At the origin, we find no gains: employment fell by 6.6 percentage points among stayers, movement into professional jobs declined, and health and housing did not improve. We complement these estimates with a discrete choice experiment revealing preference among factory workers at the destination, which shows that workers' own valuations of occupational health risk are large relative to the relocation's earnings gain.