The Cost of Air Pollution for Workers and Firms

Pré-publication, Document de travail: This paper shows that even moderate air pollution levels, such as those in Europe, harm the economy by reducing firm performance. Using monthly firm-level data from France, we estimate the causal impact of fine particulate matter (PM 2.5 ) on sales and worker absenteeism. Leveraging exogenous pollution shocks from local wind direction changes, we find that a 10 percent increase in monthly PM 2.5 exposure reduces firm sales by 0.4 percent on average over the next two months, with sector-specific variation. Simultaneously, sick leave rises by 1 percent. However, this labor supply reduction explains only a small part of the sales decline. Our evidence suggests that air pollution also reduces worker productivity and dampens local demand. Aligning air quality with WHO guidelines would yield economic benefits on par with the costs of regulation or the health benefits from reduced mortality.

Auteur(s)

Marion Leroutier, Hélène Ollivier

Date de publication
  • 2025
Mots-clés JEL
H23 I10 Q53
Mots-clés
  • Cost of air pollution
  • Absenteeism
  • Firm performance
Référence interne
  • PSE Working Papers n°2025-14
Pages
  • 19 p.
Version
  • 1