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Air Quality and Manufacturing Firm Productivity: Comprehensive Evidence from China

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  • Fu, Shihe
  • Viard, Brian
  • Zhang, Peng

Abstract

We provide comprehensive estimates of air pollution’s effect on short-run labor productivity for manufacturing firms in China from 1998 to 2007. An emerging literature estimates air pollution’s effects on labor productivity but only for small groups of workers of particular occupations or sets of firms to ensure causality. To provide more comprehensive estimates necessary for policy analysis, we estimate effects for all but some small firms (90% of manufacturing output in China) and capture all channels by which pollution influences productivity. We instrument for reverse causality between pollution and output using thermal inversions. Our causal estimates imply that a one

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  • Fu, Shihe & Viard, Brian & Zhang, Peng, 2017. "Air Quality and Manufacturing Firm Productivity: Comprehensive Evidence from China," MPRA Paper 78914, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:78914
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    Cited by:

    1. Bin Li & Shuai Shi & Yating Zeng, 2020. "The Impact of Haze Pollution on Firm-Level TFP in China: Test of a Mediation Model of Labor Productivity," Sustainability, MDPI, vol. 12(20), pages 1-21, October.
    2. Bridget Hoffmann & Juan Pablo Rud, 2022. "Exposure or Income? The Unequal Effects of Pollution on Daily Labor Supply," Working Papers 109, Red Nacional de Investigadores en Economía (RedNIE).
    3. La Nauze, Andrea & Severnini, Edson R., 2021. "Air Pollution and Adult Cognition: Evidence from Brain Training," IZA Discussion Papers 14353, Institute of Labor Economics (IZA).
    4. Olexiy Kyrychenko, 2021. "Environmental Regulations, Air Pollution, and Infant Mortality in India: A Reexamination," CERGE-EI Working Papers wp703, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    5. Ekundayo P. Mesagan & Titilope C. Adewuyi & Olugbenga Olaoye, 2022. "Corporate Finance, Industrial Performance and Environment in Africa: Lessons for Policy," Working Papers of the African Governance and Development Institute. 22/026, African Governance and Development Institute..
    6. Heyes, Anthony & Zhu, Mingying, 2019. "Air pollution as a cause of sleeplessness: Social media evidence from a panel of Chinese cities," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    7. Fu, Shihe & Guo, Mengmeng, 2017. "Running with a Mask? The Effect of Air Pollution on Marathon Runners’ Performance," MPRA Paper 79473, University Library of Munich, Germany.
    8. Chen, Siyu & Guo, Chongshan & Huang, Xinfei, 2018. "Air Pollution, Student Health, and School Absences: Evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 465-497.
    9. Agarwal, Sumit & Wang, Long & Yang, Yang, 2021. "Impact of transboundary air pollution on service quality and consumer satisfaction," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 357-380.
    10. Hoffmann, Bridget & Rud, Juan Pablo, 2022. "Exposure or Income? The Unequal Effects of Pollution on Daily Labor Supply," IDB Publications (Working Papers) 11985, Inter-American Development Bank.

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    More about this item

    Keywords

    air pollution; productivity; environmental costs and benefits; firm competitiveness;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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