The Grandkids Aren’t Alright: The Intergenerational Effects of Prenatal Pollution Exposure

Evidence increasingly shows that environmental quality shapes human capital at birth with long-run effects on health and welfare. Do these effects, in turn, affect the economic opportunities of future generations? Using newly linked survey and administrative data, providing more than 150 million parent-child links, we show that regulation-induced improvements in air quality that parents experienced during gestation increase the likelihood that their children, the second-generation, attend college 40-50 years later. Greater parental resources and investments, rather than biological channels, appear to drive this effect. Our findings suggest that within-generation estimates of marginal damages substantially underestimate the total welfare effects of improving environmental quality and point to the empirical relevance of environmental quality as a contributor to economic opportunity in the United States.