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The effect of pollution on labor supply: Evidence from a natural experiment in Mexico City

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  • Hanna, Rema
  • Oliva, Paulina

Abstract

Moderate effects of pollution on health may exert important influences on work. We exploit exogenous variation in pollution due to the closure of a large refinery in Mexico City to understand how pollution impacts labor supply. The closure led to a 19.7% decline in pollution, as measured by SO2, in the surrounding neighborhoods. The closure led to a 1.3h (or 3.5%) increase in work hours per week. The effects do not appear to be driven by differential labor demand shocks nor selective migration.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:pubeco:v:122:y:2015:i:c:p:68-79
    DOI: 10.1016/j.jpubeco.2014.10.004
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    References listed on IDEAS

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    Keywords

    Labor supply; Air pollution;

    JEL classification:

    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • 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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