Human capital is an intrinsic and crucial element in many aspects of modern economies. Whether it is labour-intensive work or the service sector, human capital remains the key driving force in most jobs. However, several studies have shown that the quality of this valuable resource can be undermined by air pollution, thereby limiting the true potential of human capital and labour.
What comes to mind first when you try to imagine how air pollution could possibly lower productivity? If you are picturing bodies becoming slower and weaker from breathing in polluted air outdoors, then we are on the same wavelength! A study by Zivin and Neidell (2012) has shown that surface ozone concentration and worker productivity are negatively related, where worker productivity improves by 5.5% for a 10 parts per billion (ppb) decline in surface ozone concentration.
Figure 1. Table summarising the effects of ozone on “avoidance behaviour” (Zivin and Neidell, 2012)
Several of their key findings are reported in the first row of Figure 1, which displays the effects of an increase in 10 ppb of ozone on what they termed “avoidance behaviour”. Interestingly, while increased ozone concentration appeared to bear little influence over whether workers chose to show up for work, it did translate to a significant fall in the number of hours worked. Considering that surface ozone is known to induce respiratory problems and impede lung functions (EPA, n.d.), these findings are highly reasonable. It is nonetheless crucial to note that the subjects in Zivin and Neidell’s (2012) study were agricultural workers working in outdoor environments which typically have higher levels of surface ozone (Salonen et al., 2018).
Are indoor working environments necessarily safer and more productive then? Chen and Zhang’s (2021) study of Chinese workers in a prison factory environment revealed similar findings where a 10-unit increase in the air pollution index (API) reduced labour productivity by 4%. In their study, wages were used as a direct measure of productivity since prison workers are paid piece-rate wages rather than by the hour. The values in Figure 2 indicate that “production” workers suffer wage and productivity losses with rising API, while those in “management and logistics service” appear to earn more. However, the authors did note that only a mere 3% of the prison worker population was skilled or qualified enough to work the latter jobs. Hence, while we now know that people working indoors are also vulnerable to productivity loss due to air pollution, what remains uncertain is whether the nature of the job influences or even reverses the extent of productivity loss.
Figure 2. Section of a table displaying the change in wages (measure of productivity) based on changes in air pollution index (API) (Chen and Zhang, 2021)
A potential answer to that question lies in the work of Chang et al. (2019), who studied the effects of rising API on the productivity of call centre workers in China. Unlike agricultural and prison factory workers, call centre staff undergo far less physically strenuous jobs, typically within indoor offices. Yet, Panel B of Figure 3 shows that both the odds of showing up for work and the number of hours actually worked decrease with worsening air quality (from API 50-100 to API 200+). Like in the case of the agricultural workers, it is conceivable that polluted air hinders bodily functions and reduces productivity especially after prolonged exposure.
Figure 3. Table displaying the effects of air pollution on work absence and working hours at a Chinese call centre (Chang et al., 2019)
The next time you feel lethargic or unmotivated at work, don’t be too quick to blame that movie you were watching late last night or the coffee you forgot to drink in the morning. Instead, it could very well be the air you are breathing. Since productivity loss stemming from air pollution is not limited to outdoor jobs, air pollution remains a critical issue that societies and nations should collectively work towards addressing and resolving.
Until the next entry, breathe safe and be safe!
References
Chang, T. Y., Zivin, J. G., Gross, T., & Neidell, M. (2019). The Effect of Pollution on Worker Productivity. American Economic Journal, 11(1), 151–172. https://www.jstor.org/stable/26565517.
Chen, S., & Zhang, D. (2021). Impact of air pollution on labor productivity: Evidence from prison factory data. China Economic Quarterly International, 1(2), 148–159. https://doi.org/10.1016/j.ceqi.2021.04.004
EPA. (n.d.). Health Effects of Ozone in the General Population. United States Environmental Protection Agency. Retrieved February 22, 2023, from https://www.epa.gov/ozone-pollution-and-your-patients-health/health-effects-ozone-general-population
Salonen, H., Salthammer, T., & Morawska, L. (2018). Human exposure to ozone in school and Office Indoor Environments. Environment International, 119, 503–514. https://doi.org/10.1016/j.envint.2018.07.012
Zivin, J. G., & Neidell, M. (2012). The impact of pollution on worker productivity. American Economic Review, 102(7), 3652–3673. https://doi.org/10.1257/aer.102.7.3652