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Air Pollution and Innovation

Author

Listed:
  • Felix Bracht
  • Dennis Verhoeven

Abstract

Existing estimates of the economic costs of air pollution do not account for its effect on inventive output. Using two weather phenomena as instruments, we estimate this effect in a sample of 1,288 European regions. A decrease in exposure to small particulate matter of 0:17 g=m3 – the average yearly reduction in Europe – leads to 1.7% more patented inventions. After ruling out reallocation of human capital, inventor mortality and R&D expenditures as drivers of the effect, we conclude that air pollution’s harm to economic output increases by at least 10% when accounting for innovation.

Suggested Citation

  • Felix Bracht & Dennis Verhoeven, 2021. "Air Pollution and Innovation," Working Papers of Department of Management, Strategy and Innovation, Leuven 685945, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    • Handle: RePEc:ete:msiper:685945
    Note: paper number MSI_2113
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    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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