Coal Smoke and the Costs of the Industrial Revolution
While the Industrial Revolution brought economic growth, there is a long debate in economics over the costs of the pollution externalities that accompanied early industrialization. To help settle this debate, this paper introduces a new theoretically-grounded strategy for estimating the impact of industrial pollution on local economic development and applies this approach to data from British cities for 1851-1911. I show that local industrial coal use substantially reduced long-run city employment growth over this period. Moreover, a counterfactual analysis suggests that plausible improvements in coal use efficiency would have led to substantially higher urbanization rates in Britain by 1911.
I thank David Atkin, Dan Bogart, Leah Boustan, Karen Clay, Dora Costa, Neil Cummins, Pablo Fajgelbaum, Roger Foquet, Tim Guinnane, Matt Kahn, Ed Kung, Miren Lafourcade, Naomi Lamoreaux, Adriana Lleras-Muney, Petra Moser, Alexander Rothenberg, Werner Troesken and seminar participants at Arizona, Arizona State, Boston University, Bristol, Carnegie-Mellon, LSE, NYU Stern, UC Davis, UC Irvine, UCLA, USC, Warwick, Wharton, The World Bank, and Yale for their helpful comments. Reed Douglas, Qiyi Song and Vitaly Titov provided excellent research assistance. I thank the Rosalinde and Arthur Gilbert Program in Real Estate, Finance and Urban Economics at UCLA, the California Center for Population Research at UCLA, and the National Science Foundation (CAREER Grant No. 1552692) for generous funding. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.