Ambient pm2.5 influences productive activities in public sector bureaucracies

Abstract

Fine particles (PM2.5) can penetrate buildings through ventilation and air conditioning systems, exposing indoors workers to pollution levels similar to those prevailing outdoors. This letter investigates the immediate influence of fine particle pollution on the productive activity of local government bureaucracies, linking novel data on the daily output of local governments in municipalities of the Athens metropolitan area, Greece, to PM2.5 levels recorded nearby. To address biases introduced by omitted variables and measurement error, I use the plausibly exogenous variation introduced by the basin’s horizontal ventilation, instrumenting PM2.5 levels with local wind strength. Estimates suggest a statistically and quantitatively significant negative effect from PM2.5 on the output of public administrations. Increasing PM2.5 levels by 1% decreases the activity proxy by around 0.25%. Results point to the influence PM2.5 can have on activities that are mentally but not physically demanding and suggest that costs from PM2.5 will increase with the share of global income produced by office workers.