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Effects of air pollution on labor supply: Evidence from Japan

Author

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  • Yamada, Daichi
  • Narita, Daiju

Abstract

We empirically examine the effects of fine particulate matter (PM2.5) pollution on labor supply based on data from Japan, a country in which the PM2.5 level is generally low to moderate. PM2.5 can adversely affect health and cause affected workers to reduce labor supply, whereas workers and firms can take reactive measures to mitigate labor supply losses. We aim to investigate the causal effects of PM2.5 pollution, managing potential endogeneity of PM2.5 pollution by using nationally representative panel data and utilizing two exogenous phenomena: thermal inversion events and transboundary pollution transport from the Asian continent. The results robustly show that increases in PM2.5 levels decrease monthly labor hours. Even moderate levels of PM2.5 pollution affect labor supply on a national scale. Our findings are related to current international discussions on low-to-moderate levels of air pollution.

Suggested Citation

  • Yamada, Daichi & Narita, Daiju, 2025. "Effects of air pollution on labor supply: Evidence from Japan," Journal of Environmental Economics and Management, Elsevier, vol. 132(C).
    • Handle: RePEc:eee:jeeman:v:132:y:2025:i:c:s0095069625000622
    DOI: 10.1016/j.jeem.2025.103178
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    Keywords

    Fine particulate matter (PM2.5); Air pollution; Labor supply; Social costs; Japan; East Asia;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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