THE EFFECTS OF AIR POLLUTION ON WORKER PRODUCTIVITY AND THE ENSUING FINANCIAL RAMIFICATIONS FOR BUSINESSES

Abstract

Through both cognitive and physical mechanisms, air pollution, especially fine particulate matter (PM2.5), severely reduces worker productivity. Using data from previous firm-level and individual worker research, this study investigates the causal link between indoor and ambient air pollution and labor productivity. Research indicates that a 1 μg/m³ rise in PM2.5 concentration can lower labor productivity by up to 0.6–1.9% in different U.S. contexts and about 0.55% in European businesses. Businesses incur significant financial costs as a result of these productivity losses, including decreased production, increased presenteeism and absenteeism, increased healthcare expenditures, and increased employee turnover. Every year, productivity losses brought on by air pollution cost the world economy trillions of dollars. The results demonstrate that enhancing air quality is both a high-return investment and a public health necessity. The results show that enhancing air quality is a high-return investment for companies and economies in addition to being a public health necessity. There is discussion of business mitigation techniques and policy proposals.