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Air Pollution and the Labor Market: Evidence from Wildfire Smoke

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  • Mark Borgschulte
  • David Molitor
  • Eric Zou

Abstract

We study how air pollution impacts the U.S. labor market by analyzing effects of drifting wildfire smoke that can affect populations far from the fires themselves. We link satellite smoke plumes with labor market outcomes to estimate that an additional day of smoke exposure reduces quarterly earnings by about 0.1 percent. Extensive margin responses, including employment reductions and labor force exits, can explain 13 percent of the overall earnings losses. The implied welfare cost of lost earnings due to air pollution exposure is on par with standard valuations of the mortality burden. The findings suggest that labor market channels warrant greater consideration in policy responses to air pollution.

Suggested Citation

  • Mark Borgschulte & David Molitor & Eric Zou, 2022. "Air Pollution and the Labor Market: Evidence from Wildfire Smoke," NBER Working Papers 29952, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29952
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    Cited by:

    1. Ran Du & Qiyun Fang & Ke Liu, 2023. "Landscape Fire and Entrepreneurial Activity: An Empirical Study Based on Satellite Monitoring Data," Land, MDPI, vol. 12(7), pages 1-22, July.
    2. 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.
    3. Avila Uribe, Antonio, 2023. "The effect of air pollution on US aggregate production," LSE Research Online Documents on Economics 118481, London School of Economics and Political Science, LSE Library.
    4. Graff Zivin, Joshua & Liu, Tong & Song, Yingquan & Tang, Qu & Zhang, Peng, 2020. "The unintended impacts of agricultural fires: Human capital in China," Journal of Development Economics, Elsevier, vol. 147(C).
    5. H. Spencer Banzhaf & William Mathews & Randall Walsh, 2024. "Hell with the Lid Off: Racial Segregation and Environmental Equity in America’s Most Polluted City," NBER Working Papers 32950, National Bureau of Economic Research, Inc.
    6. Brooke Lappe & Jason Vargo, 2022. "Disruptions from Wildfire Smoke: Vulnerabilities in Local Economies and Disadvantaged Communities in the U.S," Community Development Research Brief, Federal Reserve Bank of San Francisco, vol. 2022(06), pages 1-34, November.
    7. Walls, Margaret A. & Wibbenmeyer, Matthew, 2023. "How Local are the Local Economic Impacts of Wildfires?," RFF Working Paper Series 23-03, Resources for the Future.
    8. Rui Ying & Xiuli Wang, 2024. "Influence of Regional Air Pollution Pressure on the Green Transformation of Higher Education: An Empirical Study Based on PM2.5 in Chinese Cities," Sustainability, MDPI, vol. 16(16), pages 1-24, August.
    9. Raphaelle G. Coulombe & Akhil Rao, 2023. "Fires and Local Labor Markets," Papers 2308.02739, arXiv.org.
    10. Pan, Siyu, 2023. "Health, air pollution, and location choice," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    11. Benjamin A. Jones, 2020. "Labor Market Impacts of Deforestation Caused by Invasive Species Spread," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(1), pages 159-190, September.
    12. Unfried, Kerstin & Wang, Feicheng, 2024. "Importing air pollution? Evidence from China’s plastic waste imports," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    13. Xudong An & Stuart A. Gabriel & Nitzan Tzur-Ilan, 2024. "Extreme Wildfires, Distant Air Pollution, and Household Financial Health," Working Papers 24-01, Federal Reserve Bank of Philadelphia.
    14. Bakkensen, Laura A. & Ma, Lala & Muehlenbachs, Lucija & Benitez, Lina, 2024. "Cumulative impacts in environmental justice: Insights from economics and policy," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    15. Merfeld, Joshua D., 2023. "Air Pollution and Agricultural Productivity in a Developing Country," IZA Discussion Papers 16316, Institute of Labor Economics (IZA).
    16. Ron Chan & Martino Pelli & Veronica Vienne, 2023. "Air Pollution, Smoky Days and Hours Worked," CIRANO Working Papers 2023s-15, CIRANO.
    17. Gellman, Jacob & Walls, Margaret A. & Wibbenmeyer, Matthew, 2023. "Welfare Losses from Wildfire Smoke: Evidence from Daily Outdoor Recreation Data," RFF Working Paper Series 23-31, Resources for the Future.
    18. Lu, Pin & Malone, Trey & Lusk, Jayson L. & Wu, Kaidi, 2020. "Air Pollution and (Ir)rational Food Choice," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304330, Agricultural and Applied Economics Association.
    19. Alexandra E. Hill & Jesse Burkhardt & Jude Bayham & Katelyn O'Dell & Bonne Ford & Emily V. Fischer & Jeffrey R. Pierce, 2024. "Air pollution, weather, and agricultural worker productivity," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(4), pages 1329-1353, August.
    20. Xianru Han & Wenying Li & Haoluan Wang, 2024. "A Burning Issue: Wildfire Smoke Exposure, Retail Sales, and Demand for Adaptation in Healthcare," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(11), pages 3011-3039, November.
    21. Seung Min Kim & Kenneth Gillingham, 2024. "Air Pollution and Solar Energy: Evidence from Wildfires," CESifo Working Paper Series 10948, CESifo.

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    More about this item

    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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