Working Paper Series, Center for Labor Studies,
Uppsala University, Department of Economics

Abstract: On normal days, the temperature decreases with altitude, allowing air pollutants to rise and disperse. During inversion episodes, a warmer air layer at higher altitude traps pollu- tants close to the ground. We show how readily available NASA satellite data on vertical temperature proles can be used to measure inversion episodes on a global scale with high spatial and temporal resolution. Then, we link inversion episode data to ground level pollution monitors and to daily in- and outpatient records for the universe of children in Sweden during a six-year period to provide instrumental variable estimates of the eects of air quality on children's health. The IV estimates show that the respiratory illness health care visit rate increases by 8 percent for each 10 m=m3 increase in PM10; an es- timate four times higher than conventional estimates. Importantly, by linking the health care data to detailed records of parental background characteristics, we show that chil- dren from low-income households suer signicantly more from air pollution than children from high income households. Finally, we provide evidence on the importance of several mechanisms that could contribute to the dierence in the impact of air pollution across children in rich and poor households.

Keywords: Air pollution; Health; inversions; environmental policy; instrumental variable; nonparametric regression; socio-economic gradient in health

JEL-codes: I12; I14; J24; Q53

36 pages, First version: January 20, 2014. Revised: January 29, 2014.

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