Heads Up: Does Air Pollution Cause Workplace Accidents?

Air pollution can adversely affect physiological and cognitive performance. This study estimates the causal effect of increased nitrogen dioxide (NO2), a primary air pollutant, on construction work accidents, a significant factor related to labor market productivity losses. Using data from all construction sites and pollution monitoring stations in Israel, we find a strong and significant effect on accidents, with a 377% (138%) increase on high (moderate) NO2 pollution days compared to clean air levels. Our mechanism analysis suggests the effect is exacerbated under cognitive strain or worker fatigue. A cost-benefit analysis, supported by a nonparametric estimation, examines subsidizing site closures on highly polluted days.