Endogenous City Disamenities: Lessons from Industrial Pollution in 19th Century Britain∗ PRELIMINARY W. Walker Hanlon UCLA and NBER October 31, 2014 Abstract Industrialization and urbanization often go hand-in-hand with pollution. Growing industries create jobs and drive city growth, but may also generate pollution, an endogenous disamenity that drives workers and firms away. This paper provides an approach for analyzing endogenous disamenities in cities and applies it to study the first major episode of modern industrial pollution using data on 31 large British cities from 1851-1911. I begin by constructing a measure of industrial coal use, the largest source of industrial pollution in British cities. I show that industrial coal use was an important city disamenity; it was negatively related to measured quality-of-life in these cities and positively related to mortality. I then offer an estimation strategy that allows me to separate the negative impact of coal use on city growth through pollution from the direct positive effect of employment growth in polluting industries. My results suggest that coal-based pollution substantially impacted the growth of British cities during this period. ∗I thank Leah Boustan, Dora Costa, Matt Kahn, Adriana Lleras-Muney and Werner Troesken for their helpful comments. Reed Douglas provided excellent research assistance. Some of the data used in this study was collected using funds from a grant provided by the California Center for Population Research. Author email:
[email protected]. 1 Introduction From the mill towns of 19th century England to the mega-cities of modern China, urbanization has often gone hand-in-hand with pollution.