Air pollution is the top environmental risk factor of premature death. Annual costs of environmental damage for the European countries range between 60 and 200 billion euros, according to the European Environment Agency. The trade-off between the population health benefits of limiting air pollution and the negative impacts on industrial activity and employment has been well documented in the economics literature. A new paper by IZA researchers Andreas Lichter, Nico Pestel and Eric Sommerr looks at an aspect that is highly relevant in this context – the negative effect of environmental pollution on individual labor productivity.
The study is based on panel data for professional soccer players in Germany over the period 1999-2011. Professional sports data offer consistent and comparable measures of productivity, which are largely missing for other occupations. The authors use a player’s total number of passes per match as the main productivity indicator and combine this data with hourly information on the concentration of particulate matter in spatial proximity to each stadium at the time of kickoff. The match scheduling rules of the “Bundesliga” are beyond the control of teams and players. This setting creates exogenous variation in the players’ exposure to air pollution, thus overcoming endogeneity concerns arising from residential sorting and avoidance behavior.
The findings indicate negative and non-linear effects of air pollution on short-run productivity even for levels well below the current limits set by the European Union. The impairment of performance further increases with the age of players and is stronger if they face an additional physical burden. Given that even moderate concentrations of particulate matter negatively affect the productivity of a selective group of young and male athletes to a considerable extent, the authors conclude that environmental pollution does not only affect population health but also impedes economic growth.