Heads Up: Does Air Pollution Cause Workplace Accidents?

Victor Lavy, Genia Rachkovski and Omry Yoresh
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Victor Lavy: University of Warwick, Hebrew University, and NBER
Genia Rachkovski: Tel Aviv University
Omry Yoresh: London School of Economics

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: Literature has shown that air pollution can have short- and long-term adverse effects on physiological and cognitive performance. In this study, we estimate the effect of increased pollution levels on the likelihood of accidents in construction sites, a significant factor related to productivity losses in the labor market. Using data from all construction sites and pollution monitoring stations in Israel, we find a strong and significant causal effect of nitrogen dioxide (NO2), one of the primary air pollutants, on construction site accidents. We find that a 10-ppb increase in NO2 levels increases the likelihood of an accident by as much as 25 percent. Importantly, our findings suggest that these effects are non-linear. While moderate pollution levels, according to EPA standards, compared to clean air levels, increase the likelihood of accidents by 138 percent, unhealthy levels increase it by 377 percent. We present a mechanism where the effect of pollution is exacerbated in conditions with high cognitive strain or reduced awareness. Finally, we perform a cost-benefit analysis, supported by a nonparametric estimation calculating the implied number of accidents due to NO2 exposure, and examining a potential welfare-improving policy to subsidize the closure of construction sites on highly polluted days.

Keywords: Workplace Accidents; Labor Productivity; Air Pollution; Government Policy JEL Classification: (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-hea, nep-lma and nep-neu
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https://warwick.ac.uk/fac/soc/economics/research/c ... tions/wp770.2025.pdf

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Persistent link: https://EconPapers.repec.org/RePEc:cge:wacage:770

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