Does income inequality aggravate the impacts of air pollution on physical health? Evidence from China

Air pollution in China, caused by the country's extensive economic growth model, threatens the health of residents, especially of low-income groups. The impact and influence mechanism of this pollution on physical health has not been investigated adequately at different income levels. We examine the impact of fine particulate matter on health using panel data for the period 2010-2016 from approximately 100,000 respondents surveyed by China Family Panel Studies. In analysis, we use the hierarchical regression model according to household income per capita. We also examine the effect of residents' human and physical capital on the relationship between air pollution and health. Our research shows that air pollution has an adverse effect on physical health. However, the significance of this effect is income-based: the effect on low-income groups is significant, while that on high-income groups is not. We also find that air pollution causes both direct and indirect impacts on residents' health. Indirect impacts entail reductions in human and physical capital; however, this impact is less than the direct one. Therefore, the Chinese government should implement high environmental standards and strict regulations to control air pollution. It should also invest more in low-income areas to improve accessibility of healthcare services.