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Particulate matter and labor supply: The role of caregiving and non-linearities

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  • Aragón, Fernando M.
  • Miranda, Juan Jose
  • Oliva, Paulina

Abstract

This paper examines the effect of air pollution on labor supply in Lima, Peru. We focus on fine particulate matter (PM2.5), an important pollutant for health according to the medical literature, and show that moderate levels of pollution reduce hours worked for working adults. Our research design takes advantage of rich household panel data in labor outcomes to address omitted variables. This research design allows us to investigate whether the response to air pollution is non-linear. We find that the effect of moderate pollution levels on hours worked is concentrated among households with susceptible dependents, i.e., small children and elderly adults; while the highest concentrations affect all households. This suggests that caregiving is likely a mechanism linking air pollution to labor supply at moderate levels. We provide further evidence of this mechanism using data on children morbidity. Finally, we find no evidence of intra-household attenuation behavior. For instance, there is no re-allocation of labor across household members, and earnings decrease with air pollution.

Suggested Citation

  • Aragón, Fernando M. & Miranda, Juan Jose & Oliva, Paulina, 2017. "Particulate matter and labor supply: The role of caregiving and non-linearities," Journal of Environmental Economics and Management, Elsevier, vol. 86(C), pages 295-309.
  • Handle: RePEc:eee:jeeman:v:86:y:2017:i:c:p:295-309
    DOI: 10.1016/j.jeem.2017.02.008
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    Cited by:

    1. Liu, Haoming & Salvo, Alberto, 2017. "Severe Air Pollution and School Absences: Longitudinal Data on Expatriates in North China," IZA Discussion Papers 11134, Institute of Labor Economics (IZA).
    2. Melvin Stephens, Jr. & Desmond J. Toohey, 2018. "The Impact of Health on Labor Market Outcomes: Experimental Evidence from MRFIT," NBER Working Papers 24231, National Bureau of Economic Research, Inc.
    3. repec:eee:jeeman:v:86:y:2017:i:c:p:1-7 is not listed on IDEAS
    4. repec:spr:izalbr:v:7:y:2018:i:1:d:10.1186_s40172-018-0067-6 is not listed on IDEAS

    More about this item

    Keywords

    Q52; Q53; Labor supply; Air pollution; Developing countries;

    JEL classification:

    • 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

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