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Pollution and Labor Productivity : Evidence from Chilean Cities

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  • Jooste,Charl
  • Loch Temzelides,Ted Paul
  • Sampi Bravo,James Robert Ezequiel
  • Dudu,Hasan

Abstract

This paper investigates the effects of pollution on labor productivity in Chile. Data on fineparticulate matter pollution in Chile were collected and matched to sectoral labor productivity at the city level.The endogeneity between labor productivity and pollution is controlled for by instrumenting on the presence of coal anddiesel power plants. The paper finds that pollution reduces labor productivity. A series of robustness checksdemonstrate that pollution has a statistically significant effect on productivity when the analysis controls for laborcosts and entry rates. The paper provides extensive evidence to support a causal interpretation of this finding. Theidentification strategy is based on a stylized macroeconomic model. The pollution elasticity of labor productivity isused to demonstrate how the co-benefits of reducing pollution can be incorporated into mitigation policies in ageneral equilibrium framework.

Suggested Citation

  • Jooste,Charl & Loch Temzelides,Ted Paul & Sampi Bravo,James Robert Ezequiel & Dudu,Hasan, 2022. "Pollution and Labor Productivity : Evidence from Chilean Cities," Policy Research Working Paper Series 10236, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10236
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