Optimal environmental policy aims at equalizing benefits and costs of improving environmental quality. While the benefits generally accrue in the form of increased health, worker productivity, quality of life, and amenity values, the costs that environmental regulations might impose on the labor market are mostly borne through impacts on production, employment, and labor compensation. The articles illustrate how successful policy development requires information on the connection between environmental regulations, labor markets, and industrial activity.
Air pollution and worker productivity Updated
Higher levels of air pollution reduce worker productivity, even when air quality is generally lowMatthew NeidellNico Pestel, February 2023Environmental regulations are typically considered to be a drag on the economy. However, improved environmental quality may actually enhance productivity by creating a healthier workforce. Evidence suggests that improvements in air quality lead to improvements in worker productivity at the micro level across a range of sectors, including agriculture, manufacturing, and the service sectors, as well as at more aggregate macro levels. These effects also arise at levels of air quality that are below pollution thresholds in countries with the highest levels of environmental regulation. The findings suggest a new approach for understanding the consequences of environmental regulations.MoreLess
Air pollution, educational achievements, and human capital formation
Exposure to elevated levels of air pollution adversely affects educational outcomesSefi Roth, August 2017The link between air pollution and human health is well-documented in the epidemiology and economic literature. Recently, an increasing body of research has shown that air pollution—even in relatively low doses—also affects educational outcomes across several distinct age groups and varying lengths of exposure. This implies that a narrow focus on traditional health outcomes, such as morbidity and mortality, may understate the true benefit of reducing pollution, as air pollution also affects scholastic achievement and human capital formation.MoreLess
Climate change and the allocation of time
In various ways, climate change will affect people’s well-being and how they spend their timeMarie Connolly, January 2018Understanding the impacts of climate change on time allocation is a major challenge. The best approach comes from looking at how people react to short-term variations in weather. Research suggests rising temperatures will reduce time spent working and enjoying outdoor leisure, while increasing indoor leisure. The burden will fall disproportionately on workers in industries more exposed to heat and those who live in warmer regions, with the potential to increase existing patterns of inequalities. This is likely to trigger an adaptation, the scope and mechanisms of which are hard to predict, and will undoubtedly entail costs.MoreLess
Climate change, natural disasters, and migration
The relationship between migration and natural events is not straightforward and presents many complexitiesLinguère Mously Mbaye, March 2017The relationship between climatic shocks, natural disasters, and migration has received increasing attention in recent years and is quite controversial. One view suggests that climate change and its associated natural disasters increase migration. An alternative view suggests that climate change may only have marginal effects on migration. Knowing whether climate change and natural disasters lead to more migration is crucial to better understand the different channels of transmission between climatic shocks and migration and to formulate evidence-based policy recommendations for the efficient management of the consequences of disasters.MoreLess
Do responsible employers attract responsible employees?
The cost of a firm’s commitment to CSR may be offset by its appeal to motivated employees who work harder for lower wagesKarine Nyborg, May 2014Survey and register data indicate that many employees prefer a socially responsible employer and will accept a lower wage to achieve this. Laboratory experiments support the hypothesis that socially responsible groups are more productive than others, partly because they attract cooperative types, partly because initial cooperation is reinforced by group dynamics. Overall, the findings indicate corporate social responsibility may have cost advantages for firms.MoreLess
Does hot weather affect human fertility?
Hot weather can worsen reproductive health and decrease later birth ratesAlan Barreca, July 2017Research finds that hot weather causes a fall in birth rates nine months later. Evidence suggests that this decline in births is due to hot weather harming reproductive health around the time of conception. Birth rates only partially rebound after the initial decline. Moreover, the rebound shifts births toward summer months, harming infant health by increasing third trimester exposure to hot weather. Worse infant health raises health care costs in the short term as well as reducing labor productivity in the longer term, possibly due to lasting physiological harm from the early life injury.MoreLess
Economic effects of natural disasters
Natural disasters cause significant short-term disruptions, but longer-term economic impacts are more complexTatyana Deryugina, April 2022Extreme weather events are increasing in frequency and intensity, threatening lives and livelihoods around the world. Understanding the short- and long-term effects of such events is necessary for crafting optimal policy. The short-term economic impacts of natural disasters can be severe, suggesting that policies that better insure against consumption losses during this time would be beneficial. Longer-term economic impacts are more complex and depend on the characteristics of the affected population and the affected area, changes in migration patterns, and public policy.MoreLess
Employment effects of green energy policies Updated
Does a switch in energy policy toward more renewable sources create or destroy jobs in an industrial country?Nico Pestel, December 2019Many industrial countries are pursuing so-called green energy policies, which typically imply the replacement of conventional fossil fuel power plants with renewable sources. Such a policy shift may affect employment in different ways. On the one hand, it could create new and additional “green jobs” in the renewables sector; on the other hand, it could crowd out employment in other sectors. An additional consideration is the potential increase in energy prices, which has the potential to stifle labor demand in energy-intensive sectors and reduce the purchasing power of private households.MoreLess