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The impact of air pollution on labour productivity in France

Clara Kögel

No 2022.10, Working Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: This paper investigates the effect of air pollution on labour productivity in French establishments in both manufacturing and non-financial market services sectors from 2001 to 2018. An instrumental variable approach based on planetary boundary layer height and wind speed allows identifying the causal effect of air pollution on labour productivity. The finding shows that a 10% increase in fine particulate matter leads, on average, to a 1.5% decrease in labour productivity, controlling for firm-specific characteristics and other confounding factors. The analysis also considers different dimensions of heterogeneity driving this adverse effect. The negative impact of pollution is mainly driven by service-intensive firms and sectors with a high share of highly skilled workers. This finding is in line with the expectation that air pollution affects cognitive skills, concentration, headache, and fatigue in non-routine cognitive tasks. Compared to the marginal abatement cost of PM 2.5 reductions by the Air Quality Directive 2008/50/EC, the estimated gains only from the labour productivity channel could largely offset the abatement cost. All in all, these estimates suggest that the negative impact of air pollution is much larger than previously documented in the literature.

Keywords: Air pollution; Labour productivity; Planetary boundary layer height (search for similar items in EconPapers)
JEL-codes: J24 O13 Q51 Q52 Q53 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2022-12
New Economics Papers: this item is included in nep-eff, nep-ene, nep-env, nep-eur, nep-lma, nep-res and nep-ure
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http://faere.fr/pub/WorkingPapers/Kogel_FAERE_WP2022.10.pdf First version, 2022 (application/pdf)

Related works:
Working Paper: The impact of air pollution on labour productivity in France (2022) Downloads
Working Paper: The impact of air pollution on labour productivity in France (2022) Downloads
Working Paper: The impact of air pollution on labour productivity in France (2022) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:fae:wpaper:2022.10

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