Centralization of Environmental Administration and Air Pollution : Evidence from China

This paper studies how centralizing environmental administration affected air pollution in China. China launched a vertical administration reform in 2016 to empower upper-level Environmental Protection Bureaus to administer lower-level bureaus vertically through personnel control. Exploiting a stacked difference-in-differences strategy and a regression discontinuity design, we find that the verticalization reform significantly reduced air pollution. The effect was stronger in places where air pollution is less likely to be affected by spillovers from other provinces or where local governments paid less attention to environmental protection before the reform. Additionally, we find that the reform significantly increased the intensity of inspection by local agencies and environmental investments by heavily polluting firms