Thursday, September 22, 2016

Does Air Pollution Affect Productivity?

The Effect of Pollution on Worker Productivity: Evidence from Call-Center Workers in China (Abstract, Tom Chang, Joshua Graff Zivin, Tal Gross, Matthew Neidell, NBER Working Paper No. 22328, Jun. 2016)

Also discussed here: The effect of pollution on worker productivity: Evidence from call-centre workers in China (Tom Chang, Tal Gross, Joshua Graff Zivin, Matthew Neidell, VOX- CEPR’s Policy Portal, Jul. 15, 016)

And here:Pollution is bad for your health, but is it also making you less productive? (Tal Gross, Tom Chang, Joshua Graff Zivin, Matthew Neidell, World Economic Forum, Jul. 25, 2016)

Today we review research that looks at how the productivity of call workers in China was affected by higher levels of pollution. Results indicate that a 10% increase in the Air Pollution Index (API) was associated with a 0.3% drop in calls handled each day. Translated to China’s office workers as a whole, a 10% improvement in air pollution equates to $2.2 Billion/year in productivity. Or, to put it in a big city North American context (Los Angeles), were the 90 days that pollution levels exceeded EPA standards eliminated, the productivity for that city alone would be $378 greater. As the authors comment in terms of broader implications, pollution restrictions, aimed at an improved environment, are sometimes seen as a negative, unfair “tax” by businesses. This paper shows that it could help rather than hinder their bottom line.


Key Quotes:

“this is the first study to demonstrate that the negative impacts of pollution on productivity extend beyond physically demanding tasks to indoor, white-collar work.”

 “the number of calls workers handled each day went down as the air pollution index (API), which is driven by particulate matter pollution in this setting, increased (see Figure 1). On average, a 10% increase in API was associated with a 0.3% drop in the number of calls handled each day. Given the range of pollution in our setting, this result suggests that workers are 6% more productive on low-pollution days than high-pollution days.”

“even a modest 10-unit reduction in national API levels would increase the monetised value of office worker productivity in China by $2.2 billion per year.”

“when the API exceeds the US Environmental Protection Agency standard of 100… In 2014, Los Angeles experienced 90 such days.. our results imply that the service-sector productivity in Los Angeles would have been $374 million larger had pollution levels met regulatory standards on those days." 

we tested whether pollution led to workers staying home or showing up to work late. That did not appear to be the case – on heavily polluted days, we saw fewer calls but similar hours worked.”

“It also helps to recast political discussions of environmental regulation as simply a tax on the business community – instead, reducing pollution may improve the financial bottom line.”

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