Chapter 13: Does Air Pollution Affect Labour Productivity in Indian Manufacturing? Evidence from State-level Data

Air pollution affects labour productivity and these effects arise in both indoor and outdoor environments and at varying levels of worker skill. They also arise at levels of air pollution generally considered to be within existing air quality standards and guidelines. Although the damage per individual is small when compared to more extreme events, such as mortality and hospitalisations, the effects are more widespread and may thus represent a significant cost to society. Labour is an essential element in every nation’s economy serving as one of the primary factors of production and India not an exception. Investing in human capital is viewed as a key source of sustained increase in labour productivity and economic growth. On the other hand, environmental regulations are typically considered to be a struggle on the economy. However, improved environmental quality may actually enhance productivity by creating a healthier workforce. At the same time, air pollution may affect labour productivity and can reduce the productivity of workers in physically demanding occupations. This chapter may be an attempt to provide comprehensive estimates of the major air pollutants in different states of India and also tries to identify the linkage between air pollution and labour productivity in case of Indian manufacturing sector.