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Air pollution, labor productivity, and individual consumption

Author

Listed:
  • Shuai Chen

    (Zhejiang University)

  • Min Wang

    (Peking University)

  • Dandan Zhang

    (Peking University)

Abstract

This paper examines how air pollution affects consumption decisions through income and substitution channels by linking daily air pollution data with monthly records of individual consumption and labor productivity. Exploiting a quasi-experimental setting in a prison in Shenzhen City, China, we find that a 10-unit increase in the daily air pollution index reduces monthly consumption by 3.6%, with 78% of the effect explained by the income channel. The impact is heterogeneous across demographic groups and pollution levels. By jointly analyzing productivity and consumption responses, the paper contributes to a growing literature on the behavioral and economic consequences of environmental exposure.

Suggested Citation

  • Shuai Chen & Min Wang & Dandan Zhang, 2025. "Air pollution, labor productivity, and individual consumption," Journal of Population Economics, Springer;European Society for Population Economics, vol. 38(3), pages 1-28, September.
    • Handle: RePEc:spr:jopoec:v:38:y:2025:i:3:d:10.1007_s00148-025-01117-z
    DOI: 10.1007/s00148-025-01117-z
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    Keywords

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    JEL classification:

    • 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
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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