The effect of education expenditure on air pollution: Evidence from China

Education expenditure is essential in mitigating air pollution, but the relationship between education expenditure and air pollution lacks in-depth discussion. Utilizing data at the county level in China during 2007-2021, this study estimates the effect of education expenditure from local governments on air pollution. Our findings demonstrate that education expenditure significantly and negatively affects air pollution, which remains robust after addressing endogeneity. The mechanism analysis presents that education expenditure reduces air pollution through the composition, technique, and income effects. The heterogeneity analysis indicates that the impact of education expenditure exhibits marked regional heterogeneity. Specifically, the role of education expenditure is significant in strong regulation, key, eastern, and central regions. By considering interaction terms, we identify the moderating effects of human capital, economic development, infrastructure construction, and public service for education expenditure. The cost-benefit analysis emphasizes that education expenditure improves social welfare. Our findings can inspire local governments to place more emphasis on air quality and public education expenditure.