Valuing Air Pollution’s Impact on Labor Productivity in General Equilibrium

Andrew Schreiber and Peter Maniloff

No 368257, National Center for Environmental Economics-NCEE Working Papers from United States Environmental Protection Agency (EPA)

Abstract: This paper assesses the welfare implications of air pollution induced labor productivity improvements in a computable general equilibrium framework. We document that labor market productivity changes associated with a one μg/m3 reduction in PM2.5 can have a large welfare impact. Variation in the existing econometric evidence produces a range of possible welfare effects equal to approximately $950-3000 per household per year which is 50-160% of the estimated mortality impacts. Accounting for general equilibrium effects increases the welfare effect by roughly 45% relative to a back of the envelope estimate. Allowing for sector-specific shocks or impacts to leisure preferences have little effect on aggregate results. We also find that the aggregate welfare effect is approximately proportional to the shock size.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 42
Date: 2025
New Economics Papers: this item is included in nep-env and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nceewp:368257

DOI: 10.22004/ag.econ.368257

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