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Air Pollution and the Labor Market: Evidence from Wildfire Smoke

Author

Listed:
  • Mark Borgschulte

    (University of Illinois and IZA)

  • David Molitor

    (University of Illinois and NBER)

  • Eric Yongchen Zou

    (University of Michigan and NBER)

Abstract

We study how air pollution impacts the U.S. labor market by analyzing the effects of drifting wildfire smoke. We link satellite-based smoke plume data with labor market outcomes to estimate that an additional day of smoke exposure reduces quarterly earnings by about 0.1%. Extensive margin responses, including employment reductions and labor force exits, explain 13% of the overall earnings losses. The implied welfare costs from lost earnings due to air pollution exposure is on par with standard valuations of the mortality burden. The findings highlight the importance of labor market channels in air pollution policy responses.

Suggested Citation

  • Mark Borgschulte & David Molitor & Eric Yongchen Zou, 2024. "Air Pollution and the Labor Market: Evidence from Wildfire Smoke," The Review of Economics and Statistics, MIT Press, vol. 106(6), pages 1558-1575, November.
    • Handle: RePEc:tpr:restat:v:106:y:2024:i:6:p:1558-1575
    DOI: 10.1162/rest_a_01243
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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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