Job Market Paper:
The effect of air pollution on US aggregate production 

I study the effects of PM2.5 on county-level GDP, GDP per capita, and GDP per employee in the United States (2006-2018). I instrument yearly air pollution exposure by county with wildfire-induced PM2.5 exposure from air trajectories simulations. 

Contrary to recent studies in China and the EU, which find large overall negative effects, my results show no overall effect for the US. However, economically relevant negative effects are present in rural areas, during working days or when base levels or air pollution are above the median. The results are robust to various alternative specifications and alternative instruments previously used in the literature, such as thermal inversions or smoke plume polygons.

Finally, I perform back-of-the envelope calculations with the estimates of compliance costs and reduction of pollution from the Clean Air Act Amendments. They suggest that the cost of reducing air pollution nationwide is around half the size of the increases in rural areas' GDP it creates. 

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Low Emission Zones and local production: The case of German cities 

This paper provides the first estimates of the impact of Low Emission Zones on the growth and structure of the local economy by using their staggered introduction in German cities since 2008. 

More than 400 Low Emission Zones (LEZ) have been adopted in Europe. While LEZ impose restrictions on vehicle use and are sometimes criticised for “hurting the economy”, recent literature suggests LEZ could improve economic performance through their proven reduction of air pollution. 

I find that the application of Low Emission Zones permanently reduced local GDP by 4.5% on average (≈790€ billion per year for the subset of cities studied). The driving factor of the negative effect I find is a reduction in productivity and employment. 

LEZ slightly changed the structure of the local economy away from industry (decreased from 25% to 23.5% of GVA) and towards public services (increased from 24% to 14.8% of GVA) and local commerce and personal services (increased from 20% to 20.7% of GVA). These results suggest that the restrictions from LEZ, and the substantial capital losses they generate to sectors that rely on high-polluting vehicles, might produce large and previously unaccounted costs (and changes) to the local economy.

Working paper available upon request