Working Paper: NBER ID: w19944
Authors: Tom Chang; Joshua Graff Zivin; Tal Gross; Matthew Neidell
Abstract: We study the effect of outdoor air pollution on the productivity of indoor workers at a pear-packing factory. We focus on fine particulate matter (PM2.5), a harmful pollutant that easily penetrates indoor settings. We find that an increase in PM2.5 outdoors leads to a statistically and economically significant decrease in packing speeds inside the factory, with effects arising at levels well below current air quality standards. In contrast, we find little effect of PM2.5 on hours worked or the decision to work, and little effect of pollutants that do not travel indoors, such as ozone. This effect of outdoor pollution on the productivity of indoor workers suggests a thus far overlooked consequence of pollution. Back-of-the-envelope calculations suggest that nationwide reductions in PM2.5 from 1999 to 2008 generated $19.5 billion in labor cost savings, which is roughly one-third of the total welfare benefits associated with this change.
Keywords: Air Pollution; Productivity; Labor Economics; Environmental Economics
JEL Codes: J22; J24; J43; Q51; Q53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Outdoor PM2.5 levels (Q53) | Productivity of indoor workers (J29) |
| Increase in PM2.5 by 10 µg/m³ (I14) | Decrease in worker productivity (J29) |
| PM2.5 levels exceeding 15 µg/m³ (Q53) | Decrease in worker productivity (J29) |
| PM2.5 levels (Y10) | Labor supply (J22) |
| Other pollutants (e.g., ozone) (Q53) | Productivity of indoor workers (J29) |