Severe air pollution undermines worker productivity, study finds
Researchers from the National University of Singapore found that severe air pollution affects work productivity negatively. Their study found that prolonged exposure to airborne pollutant particles undermines worker productivity in China.
Jiaxiu He, Haoming Liu, and Alberto Salvo wrote about their study and findings in the American Economic Journal: Applied Economics (citation below).
According to the authors:
“Most of us are familiar with the negative impact air pollution can have on health, but as economists, we wanted to look for other socioeconomic outcomes. Our aim with this research was to broaden the understanding of air pollution in ways that have not been explored.”
“We typically think that firms benefit from lax pollution regulations, by saving on emission control equipment and the like; here we document an adverse effect on the productivity of their workforce.”
Worker productivity refers to how much a worker produces per hour, day, week, or month. Let’s suppose, for example, that workers in a shirt factory produced an average of ten shirts per day each in 2018. In 2019, one year later, they produced eleven shirts each per day. Their productivity increased by 10%.
Pollution refers to the presence of substances in the environment that are toxic or harmful. We refer to the release of harmful substances and particulates into the atmosphere as air pollution.
Link between air pollution and worker productivity
The researchers spent more than a year gathering and analyzing data from factories in China. They interviewed managers of twelve companies in four different provinces.
They then obtained access to data from two factories, one in Jiangsu and the other in Henan.
Both factories were textile mills. Their workers were paid piece rate. In other words, their income depended on how many pieces of fabric they made. This made it easier for the researchers to examine daily records of worker productivity. Specifically, productivity during certain shifts.
The team compared worker productivity against measures of concentrations of particulate matter that workers were exposed to during their shift. In other words, they tried to determine whether air pollution might affect worker productivity.
The standard way of determining air pollution severity is to measure PM2.5 readings. PM2.5 refers to atmospheric PM (particulate matter) that have a diameter of less than 2.5 micrometers. 2.5 micrometers is about 3% of the diameter of a human hair.
Air quality in many emerging economies
Many people who live in emerging economies are exposed to particulate concentrations that public health authorities deem harmful. At the two factories, air pollution levels were consistently high. Even so, air pollution levels varied considerably from day to day.
In one location, PM2.5 levels averaged 85 micrograms per cubic meter. This was approximately seven times the US EPA’s safe limit. EPA stands for the Environmental Protection Agency.
Prolonged exposure undermined worker productivity
Interestingly, the researchers found that daily fluctuations in pollution levels did not immediately undermine worker productivity. This finding clashed with those of previous studies.
However, a definite decline in worker productivity was evident when they measured for more prolonged exposures. In this study, ‘more prolonged’ means up to thirty days. The authors say they were careful to control for regional economic activity and other confounding factors.
Liu Haoming, an Associate Professor in the Department of Economics, said:
“We found that an increase in PM2.5, by 10 micrograms per cubic meter sustained over 25 days, reduces daily output by 1 percent, harming firms and workers. The effects are subtle but highly significant.”
The authors say they remain unsure about why productivity declines when pollution rises.
Assoc. Prof. Liu said:
“High levels of particles are visible and might affect an individual’s well-being in a multitude of ways. Besides entering via the lungs and into the bloodstream, there could also be a psychological element.”
“Working in a highly polluted setting for long periods of time could affect your mood or disposition to work.”
Study data is open access
NUS says that all the data from this study is being made open access. In other words, other researchers will have free access to it.
Assoc Prof Salvo added:
“This was a key criterion for inclusion in our study. We wanted to share all the information we gathered so that other researchers may use it as well, hopefully adding to this literature’s long-run credibility. We saw no reason why data on anonymous workers at a fragmented industry could not be shared.”
He, Jiaxiu, Haoming Liu, and Alberto Salvo. 2019. “Severe Air Pollution and Labor Productivity: Evidence from Industrial Towns in China.” American Economic Journal: Applied Economics, 11 (1): 173-201. DOI: 10.1257/app.20170286.