High pollution, low productivity

04 January 2019 | Research - Impact

The NUS study revealed that prolonged exposure to air pollution can reduce worker productivity

A study by researchers from NUS Economics has revealed a correlation between pollution and productivity of employees. The extensive study saw the researchers, led by Associate Professor Alberto Salvo, gather information from various factories in China, discovering that exposure to air pollution over several weeks can reduce employee productivity.

Although most people are familiar with the negative impact of air pollution on health, as economists the team was interested in looking for other socioeconomic outcomes, said Assoc Prof Salvo. “Our aim with this research was to broaden the understanding of air pollution in ways that have not been explored. We typically think that firms benefit from lax pollution regulations by saving on emission control equipment and the like; here we document an adverse effect on the productivity of the workforce,” he added.

The team, which included Associate Professor Liu Haoming and post-doctoral fellow Dr He Jiaxiu, first interviewed managers at one dozen firms in four separate provinces before obtaining access to data in two textile mills — one in Henan and one in Jiangsu.

As the workers in the textile mills were paid according to each piece of fabric they made, the daily records of productivity for workers on each shift could be examined. The severity of pollution was determined by measuring how many fine particles less than 2.5 micrometres in diameter (PM2.5) were present in the air.

Comparing both values, they found that while daily fluctuations in pollution did not immediately affect workers’ productivity, prolonged exposure of up to 30 days led to a definite drop in output.

“We found that an increase in PM2.5 by 10 micrograms per cubic metre sustained over 25 days reduces daily output by 1 per cent, harming firms and workers. The effects are subtle but highly significant,” elaborated Assoc Prof Liu.

Our aim with this research was to broaden the understanding of air pollution in ways that have not been explored. We typically think that firms benefit from lax pollution regulations by saving on emission control equipment and the like; here we document an adverse effect on the productivity of the workforce.

The results obtained from this study could be applied to Singapore, said the researchers, even though very high levels of PM2.5 due to transboundary pollution have not been frequent. “Considering a fortnight or month during which PM2.5 is higher by 10 micrograms per cubic metre may be more relevant to Singapore, say due to a still atmosphere with poor ventilation. Our study suggests that worker productivity in such cases could be 1 per cent lower,” said Assoc Prof Salvo.

While the study did not investigate the mechanisms behind the inverse relationship between pollution and productivity, Assoc Prof Liu said that high levels of particles are visible and might affect an individual’s wellbeing in a multitude of ways. “Besides entering via the lungs and into the bloodstream, there could also be a psychological element. Working in a highly polluted setting for long periods of time could affect your mood or disposition to work,” he suggested.

The study, the first of its kind to examine prolonged exposure to air pollution, was published in the American Economic Journal: Applied Economics on 3 January.

See press release.