The Effect of Beijing's Driving Restrictions on Pollution and Economic Activity

We evaluate the environmental and economic effects of Beijing’s driving restrictions. Based on daily data from multiple monitoring stations, air pollution falls 19 % during every-other-day and 8 % during one-day-per-week restrictions. Based on hourly viewership data, the number of television viewers during the restrictions increases 1.7 to 2.3 % for workers with discretionary work time but is unaffected for workers without, consistent with the restrictions ’ higher per-day commute costs reducing daily labor. Causal effects are identified from both time-series and spatial variation in air quality and intra-day variation in viewership. We provide possible reasons for the policy’s success, including evidence of high compliance based on parking garage entrance records. Our results contrast with previous findings of no pollution reductions from driving restrictions and provide new evidence on commute costs and labor supply