IDEAS home Printed from https://ideas.repec.org/a/wly/emetrp/v92y2024i4p1063-1096.html
   My bibliography  Save this article

The Unequal Effects of Pollution on Labor Supply

Author

Listed:
  • Bridget Hoffmann
  • Juan Pablo Rud

Abstract

We use high‐frequency data on fine particulate matter air pollution (PM 2.5) at the locality level to study the effects of high pollution on daily labor supply decisions in the metropolitan area of Mexico City. We document a negative, non‐linear relationship between PM 2.5 and same‐day labor supply, with strong effects on days with extremely high pollution levels. On these days, the average worker experiences a reduction of around 7.5% of working hours. Workers partially compensate for lost hours by increasing their labor supply on days that follow high‐pollution days. We find that low‐income workers reduce their labor supply significantly less than high‐income workers. Unequal responses to high pollution along other dimensions (job quality, flexibility, gender) matter, but less than income. We provide suggestive evidence that reductions in labor supply due to high pollution are consistent with avoidance behavior.

Suggested Citation

  • Bridget Hoffmann & Juan Pablo Rud, 2024. "The Unequal Effects of Pollution on Labor Supply," Econometrica, Econometric Society, vol. 92(4), pages 1063-1096, July.
    • Handle: RePEc:wly:emetrp:v:92:y:2024:i:4:p:1063-1096
    DOI: 10.3982/ECTA20484
    as

    Download full text from publisher

    File URL: https://doi.org/10.3982/ECTA20484
    Download Restriction: no
    File URL: https://libkey.io/10.3982/ECTA20484?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hanna, Rema & Oliva, Paulina, 2015. "The effect of pollution on labor supply: Evidence from a natural experiment in Mexico City," Journal of Public Economics, Elsevier, vol. 122(C), pages 68-79.
    2. Cygan-Rehm, Kamila & Wunder, Christoph, 2018. "Do working hours affect health? Evidence from statutory workweek regulations in Germany," Labour Economics, Elsevier, vol. 53(C), pages 162-171.
    3. Tatyana Deryugina & Garth Heutel & Nolan H. Miller & David Molitor & Julian Reif, 2019. "The Mortality and Medical Costs of Air Pollution: Evidence from Changes in Wind Direction," American Economic Review, American Economic Association, vol. 109(12), pages 4178-4219, December.
    4. Eva Arceo & Rema Hanna & Paulina Oliva, 2016. "Does the Effect of Pollution on Infant Mortality Differ Between Developing and Developed Countries? Evidence from Mexico City," Economic Journal, Royal Economic Society, vol. 126(591), pages 257-280, March.
    5. Colin Camerer & Linda Babcock & George Loewenstein & Richard Thaler, 1997. "Labor Supply of New York City Cabdrivers: One Day at a Time," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 407-441.
    6. Jans, Jenny & Johansson, Per & Nilsson, J. Peter, 2018. "Economic status, air quality, and child health: Evidence from inversion episodes," Journal of Health Economics, Elsevier, vol. 61(C), pages 220-232.
    7. Oriana Bandiera & Renata Lemos & Andrea Prat & Raffaella Sadun, 2018. "Managing the Family Firm: Evidence from CEOs at Work," The Review of Financial Studies, Society for Financial Studies, vol. 31(5), pages 1605-1653.
    8. Stafford, Tess M., 2015. "Indoor air quality and academic performance," Journal of Environmental Economics and Management, Elsevier, vol. 70(C), pages 34-50.
    9. Malvina Bondy & Sefi Roth & Lutz Sager, 2020. "Crime Is in the Air: The Contemporaneous Relationship between Air Pollution and Crime," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(3), pages 555-585.
    10. Janet Currie & Matthew Neidell, 2005. "Air Pollution and Infant Health: What Can We Learn from California's Recent Experience?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 1003-1030.
    11. Kamila Cygam-Rehm & Christoph Wunder, 2018. "Do Working Hours Affect Health? Evidence from Statutory Workweek Regulations in Germany," SOEPpapers on Multidisciplinary Panel Data Research 967, DIW Berlin, The German Socio-Economic Panel (SOEP).
    12. Kenneth Y. Chay & Michael Greenstone, 2003. "The Impact of Air Pollution on Infant Mortality: Evidence from Geographic Variation in Pollution Shocks Induced by a Recession," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 1121-1167.
    13. Fernando M. Aragón & Juan Pablo Rud, 2016. "Polluting Industries and Agricultural Productivity: Evidence from Mining in Ghana," Economic Journal, Royal Economic Society, vol. 126(597), pages 1980-2011, November.
    14. Gabriel Ulyssea, 2018. "Firms, Informality, and Development: Theory and Evidence from Brazil," American Economic Review, American Economic Association, vol. 108(8), pages 2015-2047, August.
    15. Prashant Bharadwaj & Matthew Gibson & Joshua Graff Zivin & Christopher Neilson, 2017. "Gray Matters: Fetal Pollution Exposure and Human Capital Formation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 505-542.
    16. Joshua Graff Zivin & Matthew Neidell, 2013. "Environment, Health, and Human Capital," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 689-730, September.
    17. Fernando M. Aragón & Juan Pablo Rud, 2016. "Polluting Industries and Agricultural Productivity: Evidence from Mining in Ghana," Economic Journal, Royal Economic Society, vol. 126(597), pages 1980-2011.
    18. Seema Jayachandran, 2006. "Selling Labor Low: Wage Responses to Productivity Shocks in Developing Countries," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 538-575, June.
    19. Fu, Shihe & Viard, Brian & Zhang, Peng, 2017. "Air Quality and Manufacturing Firm Productivity: Comprehensive Evidence from China," MPRA Paper 78914, University Library of Munich, Germany.
    20. Zhang, Xin & Zhang, Xiaobo & Chen, Xi, 2017. "Happiness in the air: How does a dirty sky affect mental health and subjective well-being?," Journal of Environmental Economics and Management, Elsevier, vol. 85(C), pages 81-94.
    21. Wolfram Schlenker & W. Reed Walker, 2016. "Airports, Air Pollution, and Contemporaneous Health," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(2), pages 768-809.
    22. Lepinteur, Anthony, 2019. "The shorter workweek and worker wellbeing: Evidence from Portugal and France," Labour Economics, Elsevier, vol. 58(C), pages 204-220.
    23. Enrico Moretti & Matthew Neidell, 2011. "Pollution, Health, and Avoidance Behavior: Evidence from the Ports of Los Angeles," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 154-175.
    24. Fernando M. Aragón & Francisco Oteiza & Juan Pablo Rud, 2021. "Climate Change and Agriculture: Subsistence Farmers' Response to Extreme Heat," American Economic Journal: Economic Policy, American Economic Association, vol. 13(1), pages 1-35, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bogaard, Mariët & Künn, Steffen & Palacios, Juan & Pestel, Nico, 2024. "Polluted Job Search: The Impact of Poor Air Quality on Reservation Wages," IZA Discussion Papers 17344, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bridget Hoffmann & Juan Pablo Rud, 2022. "Exposure or Income? The Unequal Effects of Pollution on Daily Labor Supply," Working Papers 109, Red Nacional de Investigadores en Economía (RedNIE).
    2. Chen, Xiaoguang & Chen, Luoye & Xie, Wei & Mueller, Nathaniel D. & Davis, Steven J., 2023. "Flight delays due to air pollution in China," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    3. Gillingham, Kenneth & Huang, Pei, 2021. "Racial disparities in the health effects from air pollution: Evidence from ports," ZEW Discussion Papers 21-058, ZEW - Leibniz Centre for European Economic Research.
    4. Singh, Tejendra Pratap & Visaria, Sujata, 2021. "Up in the Air: Air Pollution and Crime – Evidence from India," SocArXiv hs4xj, Center for Open Science.
    5. Hoffmann, Bridget & Rud, Juan Pablo, 2022. "Exposure or Income? The Unequal Effects of Pollution on Daily Labor Supply," IDB Publications (Working Papers) 11985, Inter-American Development Bank.
    6. Andrea La Nauze & Edson R. Severnini, 2021. "Air Pollution and Adult Cognition: Evidence from Brain Training," NBER Working Papers 28785, National Bureau of Economic Research, Inc.
    7. Ball, Alastair, 2014. "Air pollution, foetal mortality, and long-term health: Evidence from the Great London Smog," MPRA Paper 63229, University Library of Munich, Germany, revised 25 Mar 2015.
    8. Sandra Aguilar-Gomez & Nathaly M. Rivera, 2024. "Air Pollution in the Global South: An Overview of Its Sources and Impacts," Working Papers wp561, University of Chile, Department of Economics.
    9. Ordoñez, Pablo J., 2020. "Power Plants, Air Pollution, and Health in Colombia," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304284, Agricultural and Applied Economics Association.
    10. Guo, Liwen & Cheng, Zhiming & Tani, Massimiliano & Cook, Sarah & Zhao, Jiaqi & Chen, Xi, 2022. "Air Pollution and Entrepreneurship," GLO Discussion Paper Series 1196, Global Labor Organization (GLO).
    11. Chen, Siyu & Guo, Chongshan & Huang, Xinfei, 2018. "Air Pollution, Student Health, and School Absences: Evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 465-497.
    12. Liao, Liping & Du, Minzhe & Chen, Zhongfei, 2021. "Air pollution, health care use and medical costs: Evidence from China," Energy Economics, Elsevier, vol. 95(C).
    13. Guo, Liwen & Cheng, Zhiming & Tani, Massimiliano & Cook, Sarah, 2024. "Air pollution and education investment," Energy Economics, Elsevier, vol. 132(C).
    14. Felix Holub & Laura Hospido & Ulrich J. Wagner, 2020. "Urban air pollution and sick leaves: evidence from social security data," Working Papers 2041, Banco de España.
    15. Clara Kögel, 2022. "The impact of air pollution on labour productivity in France," Documents de travail du Centre d'Economie de la Sorbonne 22020, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    16. Xin Zhang & Xun Zhang & Yuehua Liu & Xintong Zhao & Xi Chen, 2023. "The morbidity costs of air pollution through the Lens of Health Spending in China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1269-1292, July.
    17. Balietti, Anca & Datta, Souvik & Veljanoska, Stefanija, 2022. "Air pollution and child development in India," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).
    18. Chen, Xiao & Guo, Gangxing, 2024. "Air pollution and online lender behavior: Evidence from Chinese peer-to-peer lending," Journal of Behavioral and Experimental Finance, Elsevier, vol. 42(C).
    19. Dolores de la Mata & Carlos Felipe Gaviria Garces, 2019. "Exposure to Pollution and Infant Health: Evidence from Colombia," CINCH Working Paper Series 1902, Universitaet Duisburg-Essen, Competent in Competition and Health.
    20. Ron Chan & Martino Pelli & Veronica Vienne, 2023. "Air Pollution, Smoky Days and Hours Worked," CIRANO Working Papers 2023s-15, CIRANO.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:emetrp:v:92:y:2024:i:4:p:1063-1096. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/essssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.