Air Pollution, Avoidance Behavior and Labor Market outcomes: Evidence from the United States

I estimate the effects of exposure to ambient air pollution on daily health-related behaviors, weekly labor supply, and workplace productivity among US individuals. Using an individual fixed-effects regression approach, I examine how daily changes in outdoor air quality influence the time spent on daily health-related activities. I find that only when the air quality index becomes very unhealthy or hazardous, there is a 21% decrease in the minutes spent on outdoor sport and exercise activities, and a 260% increase in minutes spent watching TV. The increase in physical inactivity can have long-term negative health consequences. I also implement an instrumental variable (IV) strategy using wind direction and atmospheric boundary layer height as exogenous shocks to satellite-based aerosols to understand how changes in air pollution affect weekly labor supply and productivity. I find that increase in the total aerosol optical depth (AOD) leads to no overall change in labor supply decisions, both on the decision to go to work and the weekly worked hours. There are also no overall significant effects on labor productivity proxied by weekly earnings. The effects across subgroups also suggest differential effects in avoidance behaviors across the income distribution, age groups, occupations, race, and ethnicity, especially when the air quality is very unhealthy or hazardous.