IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v79y2023ics1043951x2300069x.html
   My bibliography  Save this article

Earning reduction caused by air pollution: Evidence from China

Author

Listed:
  • Wan, Liyang
  • Zhang, Ning

Abstract

This paper investigates the effect of air pollution on employees' earnings in China. Using both instrument variable (IV) and regression discontinuity design (RDD), we find that air pollution reduces employees' yearly earnings. A one μg/m3 increase in yearly PM2.5 decreases employees' yearly earnings by 175.4 CNY. The total loss in earnings for all employees working for our sample firms amounts to about 268.59 million CNY. Our estimations are not sensitive to a battery of different robustness checks. We also find that the effect of air pollution differs based on several factors including labor intensity, ownership types and firm size. Our mechanism tests indicate that air pollution can reduce employees' earnings by lowering their unit wage and reducing their working time. The resulting increase in firms' labor costs further undermines their operating status. Notably, air pollution exerts a non-linear negative effect on employees' earnings. Overall, our findings suggest that air pollution can significantly lower employees' benefits by reducing their earnings. Our paper also provides powerful support for formulating environmental regulations in the future.

Suggested Citation

  • Wan, Liyang & Zhang, Ning, 2023. "Earning reduction caused by air pollution: Evidence from China," China Economic Review, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:chieco:v:79:y:2023:i:c:s1043951x2300069x
    DOI: 10.1016/j.chieco.2023.101984
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X2300069X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2023.101984?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Employees' earnings; Air pollution; China;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:79:y:2023:i:c:s1043951x2300069x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.