Seminar

Air pollution is shown to have detrimental effects on health, productivity and cognition, which are important factors contributing to job search success. We are the first to study the impact of air pollution on job search success and behaviour. In a first step, we use administrative data on unemployed job seekers in Germany and exploit spatial and temporal variation in exposure to particulate matter (PM10). We find evidence that higher levels of PM10 increase individuals’ probability to exit unemployment but reduces their realized wages. In a second step, we consider detailed survey data to shed light on the exact mechanism behind this observation. We find that exposure to PM10 pollution triggers a reduction in individuals’ reservation wages, making job seekers apparently more likely to accept (low quality) job offers faster.