Air Quality and Manufacturing Firm Productivity: Nationwide Estimates for China

We provide nationwide estimates of air pollution’s effect on short-run labor productivity for manufacturing firms in China from 1998 to 2007. An emerging literature estimates air pollution’s effects on labor productivity but only for small groups of workers of particular occupations or firms. To provide more comprehensive estimates necessary for policy analysis, we estimate effects for all but some small firms (90% of China’s manufacturing output) and capture all channels by which pollution influences productivity. We instrument for reverse causality between pollution and output using thermal inversions. Our causal estimates imply that a on