The Cost of Air Pollution for Workers and Firms

Marion Leroutier and Hélène Ollivier ()
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Hélène Ollivier: Paris School of Economics, CNRS

No 2025-05, Working Papers from Center for Research in Economics and Statistics

Abstract: This paper shows that even moderate air pollution levels can reduce economic activity. Using monthly firm-level data from France and exploiting variation in PM2.5 exposure driven by changes in local wind direction, we find that a 10% increase in pollution decreases firm sales by 0.4% over the following two months. Effects vary by sector and operate through reduced labor supply —with a 1% increase in sick leave— lower productivity, and demand-side responses. Our results suggest that aligning air quality with WHO guidelines could generate economic benefits comparable to the costs of regulation or the health benefits from reduced mortality.

Keywords: Air pollution; Firms; Absenteeism (search for similar items in EconPapers)
JEL-codes: H23 I10 Q53 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2025-06-15
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur, nep-hea and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The Cost of Air Pollution for Workers and Firms (2025)
Working Paper: The Cost of Air Pollution for Workers and Firms (2025)
Working Paper: The Cost of Air Pollution for Workers and Firms (2025)
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