Brown Bag seminar in Economics | The Cost of Air Pollution for Workers and Firms with Marion Leroutier
Welcome to the Brown Bag Seminar in Economics organized by the Department of Economics, SSE. The seminar speaker is Marion Leroutier, SSE, who will present "The Cost of Air Pollution for Workers and Firms".
Poor air quality has been shown to affect both physical health and cognitive functions, including within hours of exposure. Do effects on workers impact firms’ economic performance? This paper is the first to address this question with country-level data combining workers’ sickness leave incidence and firms’ monthly sales, in the context of France. We exploit monthly variations in local wind direction as an instrument for exposure to particulate matter (PM2.5) pollution. We find that a 10% increase in monthly PM2.5 increases workers’ probability of entering sickness leave that month by 1%. The effect persists the following month, is larger for workers in the bottom half of the wage distribution, and is heterogeneous across economic sectors. While we fail to detect an impact of pollution on firms' sales on average, sectoral analyses reveal a negative effect in the manufacturing, construction and professional services sectors. These sectors are not the ones where pollution-induced absenteeism is the highest. This suggest that pollution impacts firms’ performance via other channels than absenteeism. We estimate that respecting the WHO’s recommended threshold for PM2.5 exposure would have avoided at least €0.13 billion in annual sickness leave spending and more than €6 billion of annual sales losses between 2009 and 2015 (0.3% of French GDP). These monetized benefits of pollution reduction focus on short-term effects and do not include healthcare and mortality costs. Thus, even in a low-pollution context representative of high-income countries, the overall benefits of further pollution reductions seem to largely compensate the costs.
She is an applied environmental economist focusing on two major environmental issues, ambient air pollution, and climate change.
More about the speaker
This seminar takes place at Stockholm School of Economics, Sveavägen 65, in room 348.
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