The Causal Effect of Air Pollution on COVID-19 Transmission: Evidence from China

He, G.; PAN, Y.; Tanaka, T.

There is increasing concern that ambient air pollution could exacerbate COVID-19 transmission. However, estimating the relationship is challenging because it requires one to account for epidemiological characteristics, to isolate the impact of air pollution from potential confounders, and to capture the dynamic impact. We propose a new econometric framework to address these challenges: we rely on the epidemiological Susceptible-Infectious-Recovered-Deceased (SIRD) model to construct the outcome of interest, the Instrument Variable (IV) model to estimate the causal relationship, and the Flexible-Distributed-Lag (FDL) model to understand the dynamics. Using data covering all prefectural Chinese cities, we find that a 10-point (14.3%) increase in the Air Quality Index would lead to a 2.80 percentage point increase in the daily COVID-19 growth rate with 2 to 13 days of delay (0.14 ~ 0.22 increase in the reproduction number: R0). These results imply that improving air quality can be a powerful tool to contain the spread of COVID-19.