The Dirtier You Breathe, The Less Safe You Are. The Effect of Air Pollution on Work Accidents

Abstract

We estimate the effect of air pollution on work-related accidents and disabilities using administrative data from Italy in a setting characterized by strict air pollution and work safety regulations. Leveraging on winter heating rules to address the endogeneity of air quality, we find that a one unit increase in PM10 causes 0.014 additional accidents and 0.0014 disabilities. These results are robust to different model specifications and when we extend the geographical scale of the analysis using an alternative instrumental variable based on the height of planetary atmospheric boundary layer. We explore the theoretical implications of these findings and empirically confirm that firms have an incentive to deploy defensive investments also when the risk of accidents derives from external factors such as air quality. Our back-of-the-envelope calculation shows that each additional unit in PM10 concentration would increase the total cost of an accident by about 1.7%.

Keywords: air pollution, workplace safety, work accidents, instrumental variable, winter heating

JEL Classification: I18, J28, J81, Q51, Q53