London Congestion Charge: The Impact on Air Pollution and School Attendance by Socioeconomic Status

Abstract

Air pollution negatively affects individuals’ health and human capital accumulation. For example, students’ school performance is hampered by air pollution as it decreases cognitive abilities and increases absences. Moreover, low-income students are the most exposed and vulnerable to the negative effects of air pollution as they lack protective resources and suffer from pre-existing health conditions. Here, we inquire how more stringent traffic regulations implemented in Central London from late 2015 affected pollution levels and school absences. First, we observe a substantive decrease in pollution in the area affected by the regulations from 2016 onwards. Secondly, we use a difference in differences approach to estimate the causal effect of the policy on school absences. For all schools combined, findings do not show any substantive improvement in attendance. However, when looking at the heterogeneous effects of the policy, we observe a significant decrease in absences for schools with a high share of students with low socioeconomic status (SES). Consequently, the findings highlight the efficacy of environmental policy in diminishing pollution levels and to benefit the poor.