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Air Quality and Manufacturing Firm Productivity: Comprehensive Evidence from China

Author

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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

Suggested Citation

  • 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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    File URL: https://mpra.ub.uni-muenchen.de/78914/1/MPRA_paper_78914.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    air pollution; productivity; environmental costs and benefits; firm competitiveness;

    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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