Severe Air Pollution and Labor Productivity: Evidence from Industrial Towns in China

Abstract

We examine day-to-day fluctuations in worker-level output at two manufacturing sites in China. Ambient fine-particle (PM2.5) pollution is severe but significantly variable, largely due to exogenous atmospheric ventilation. We obtain an insignificant immediate output response from concurrent (same-shift) variation in particle pollution. We then allow worker outcomes to respond to day-to-day variation in pollution with up to 30 days of delay. We uncover statistically significant adverse output effects from more prolonged exposure, but effects are not large. A substantial 10 ug/m3 PM2.5 variation sustained over 25 days reduces daily output by 1%.

Keywords: Air pollution, acute exposure, labor productivity, labor supply, heterogeneous effects, thermal inversions, wind, PM2.5, SO$_{2}$, environmental damage, environmental valuation, air pollutants/adverse effects, distributed lags, instrumental variables

JEL Classification: I18, J24, Q51, Q53, O44