The effect of emission trading system on infant health: evidence from China

Although existing literature has explored the effect of the emission trading system (ETS) on economic growth and pollution emissions, little is known about the impact of the ETS on residents' heath, especially infant health. Based on a "big sample" data set from 1773 county-level administrative regions in China from 2001 to 2012 and a differences-in-differences (DID) strategy, for the first time, this paper investigates the effect of China's SO₂ ETS pilot policy on infant health measured by infant mortality. In particular, from the perspectives of pollution emission reduction and green and high-quality economic growth, we empirically identify the mechanism through which the ETS influences infant mortality. The results show that the implementation of the ETS pilot policy significantly reduces infant mortality, and with the implementation of the pilot policy, such a health improvement effect is strengthened. This finding is consolidated through a series of robustness checks, including employing the method of the propensity score matching combined by the DID, using the thermal inversion strength as the instrumental variable, excluding the impacts of other environmental policies, and conducting a placebo test. In addition, the results of the mechanism analysis indicate that the ETS pilot policy significantly lowers SO₂ emission density and PM2.5 concentration and raises energy efficiency and per capita GDP. Therefore, the ETS pilot policy can improve infant health by promoting pollution emission reduction and green and high-quality economic growth. This study provides some empirical evidence for the causal relationship between environmental regulation policies and infant health, as well as some reference for the formulation and improvement of related environmental regulation policies.