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Quantifying The Health Factor as a Mediator of the Pollution-Productivity Relationships in Indonesia

Author

Listed:
  • Ghozi Naufal Ali

    (Department of Economics, Faculty of Economics & Business, Universitas Gadjah Mada)

  • Ester Dwi Sabtu

    (Department of Economics, Faculty of Economics & Business, Universitas Gadjah Mada)

  • Muhammad Putra

    (Department of Economics, Faculty of Economics & Business, Universitas Gadjah Mada)

  • Qisha Quarina

    (Department of Economics, Faculty of Economics & Business, Universitas Gadjah Mada)

Abstract

Pollution (in this term, air pollution) is an environmental phenomenon that negatively impacts the lives of the broader community and harms all aspects of the human dimension, such as health and the economy. This study aims to quantify the impact of pollution on worker productivity in developing countries using longitudinal data from Indonesia in two periods (2007 and 2014) and utilizing satellite data to represent air pollution data better. This study uses an instrumental variable (IV) approach and expands it by quantifying health aspects as one of the transmissions in the relationship between pollution and productivity. The result is that pollution negatively impacts worker productivity, with a dominant negative effect transmitted by health factors and determines their productivity. For this reason, the government is involved in tackling increasing pollution to minimize the increase in disease cases while minimizing economic losses from this phenomenon in the future.

Suggested Citation

  • Ghozi Naufal Ali & Ester Dwi Sabtu & Muhammad Putra & Qisha Quarina, 2024. "Quantifying The Health Factor as a Mediator of the Pollution-Productivity Relationships in Indonesia," Gadjah Mada Economics Working Paper Series 202403004, Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada.
    • Handle: RePEc:gme:wpaper:202403004
    as

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    File URL: https://econworkingpaper.feb.ugm.ac.id/download/working_paper/202403004.pdf
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    References listed on IDEAS

    as
    1. Christian Dippel & Andreas Ferrara & Stephan Heblich, 2020. "Causal mediation analysis in instrumental-variables regressions," Stata Journal, StataCorp LLC, vol. 20(3), pages 613-626, September.
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    More about this item

    Keywords

    Pollution; Labor Productivity; Instrumental Variable (IV); Mediation Analysis; Developing Country;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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