Conference Agenda

Does the death of a firm in a pollution-intensive industry prolong human life? While the labor market consequences of the China Shock are well established, this paper unveils its inadvertent environmental health dividends. Using Brazil as a laboratory—unique for its dual exposure to manufacturing import competition and commodity export demand—we estimate the causal effect of trade on pollution-related mortality and identify firm dynamics as transmission mechanism. Combining administrative microdata on 50 million firms with over two decades of cause-specific mortality records (2000–2019), we document a striking trade-off. We find that import competition acted as an environmental "cleansing" force: microregions more exposed to manufacturing imports experienced a robust decline in cardio-respiratory mortality, particularly among the elderly (75+). We trace this health benefit to the extensive margin of firm adjustment: the shock forced the net exit of firms in pollution-intensive ("dirty") sectors (empirically consistent with the Pollution Reduction by Rationalization Hypothesis) and accelerated the green transition of survivors (in contrast with the Distressed and Dirty Industry Hypothesis). Conversely, the agricultural export boom generated a scale effect in the frontier (Center-West), where the net entry of dirty firms increased mortality. However, we uncover a crucial heterogeneity in developed agricultural regions (South), where export shocks drove capital intensification—replacing labor with machinery—which paradoxically reduced mortality. These findings complement Bombardini & Li (2020). While they document an increase in child mortality linked to China’s export expansion, our evidence suggests that import exposure has, in contrast, reduced mortality among the elderly in Brazil.