Brain drain: The impact of air pollution on firm performance

Shuyu XUE*, Bohui ZHANG, Xiaofeng ZHAO

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

Abstract

Air pollution is a growing hazard to human health. This study examines whether air pollution affects the formation of corporate human capital and thereby firm performance. We find that people exhibit an intention to look for jobs in less polluted areas when air pollution is high in their location. This suggests that individuals arrange their lives at least partially in response to air pollution. Consistent with this hypothesis, we find that the level of skilled executives and employees at a firm drops significantly when information on pollution in the firm's location is accessible in real time and when the pollution level in the firm's location increases, especially in locations where air pollution poses greater health concerns. In addition, parallel reductions in firm productivity and value are found and become more salient when firms have a greater dependence on human capital.

Original languageEnglish
Article number102546
Number of pages31
JournalJournal of Environmental Economics and Management
Volume110
Early online date21 Sep 2021
DOIs
Publication statusPublished - Oct 2021

Bibliographical note

Xiaofeng Zhao acknowledges that the work described in this paper was partially supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China ([130354] Project No. - e.g. LU 23500019).

Publisher Copyright:
© 2021 Elsevier Inc.

Keywords

  • Air pollution
  • Brain drain
  • China
  • Firm performance
  • Human capital

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