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Abstract

We estimate the impact of air pollution on the incidence of sick leaves in a representative panel of employees affiliated to the Spanish social security system. Using over 100 million worker-by-week observations from the period 2005-2014, we obtain that higher air pollution increases the incidence of sick leaves, controlling for weather, individual effects, and a wide range of time-by-location controls. The effect is stronger for workers with pre-existing medical conditions, and weaker for workers with low job security. Our estimates are instrumental for quantifying air pollution damages due to changes in labor supply. Improved air quality in urban Spain between 2005 and 2014 saved at least €503 million in foregone production thanks to 5.55 million fewer worker absence days.​