University / Organisation : Indian Statistical Institute

Paper or project ? paper

Title : Cumulative Returns: Air Pollution, Skilled Labour and Institutional Quality

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Abstract : The productivity of high-skilled labour is crucial for institutional quality and economic growth, yet environmental factors like air pollution may compromise both. Our study uses high-frequency data on Delhi district court cases and air pollution levels to demonstrate how particulate matter significantly reduces the productivity of highly skilled knowledge workers—specifically, district court judges. Exposure to poor air quality manifests in lower judicial productivity, measured by longer case resolution times. Meeting WHO standards for particulate matter (PM 2.5) would improve judicial productivity by 25%, or about a 0.4 standard deviation reduction. Notably, the productivity impact compounds over time: three weeks of poor air quality exposure reduces judicial efficiency seven times more than a single day's exposure. Temporary pollution mitigation measures are insufficient; only systematic long-term air quality improvements can preserve high-skilled labour productivity. Environmental protection can enhance institutional quality, and thus growth, through its positive effects on high-skilled labour markets.