The Interactive Effects of Temperature and Air Pollution on Labor Productivity

Air pollution and temperature are both environmental factors that can influence the productivity of labor. We use data on aggregated real-time labor productivity in an industrial setting to investigate the interaction effects of temperature and air pollution on productivity. We find that elevated concentrations of five common pollutants significantly reduce productivity. Ozone and carbon monoxide are found to have the largest negative effects. We also demonstrate that temperature modifies the marginal effects of several of the pollutants, ozone in particular has a large effect. These results are found at levels of pollution that are currently deemed safe by the EPA