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The Unequal Effects of Pollution on Labor Supply

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  • Bridget Hoffmann
  • Juan Pablo Rud

Abstract

We use high‐frequency data on fine particulate matter air pollution (PM 2.5) at the locality level to study the effects of high pollution on daily labor supply decisions in the metropolitan area of Mexico City. We document a negative, non‐linear relationship between PM 2.5 and same‐day labor supply, with strong effects on days with extremely high pollution levels. On these days, the average worker experiences a reduction of around 7.5% of working hours. Workers partially compensate for lost hours by increasing their labor supply on days that follow high‐pollution days. We find that low‐income workers reduce their labor supply significantly less than high‐income workers. Unequal responses to high pollution along other dimensions (job quality, flexibility, gender) matter, but less than income. We provide suggestive evidence that reductions in labor supply due to high pollution are consistent with avoidance behavior.

Suggested Citation

  • Bridget Hoffmann & Juan Pablo Rud, 2024. "The Unequal Effects of Pollution on Labor Supply," Econometrica, Econometric Society, vol. 92(4), pages 1063-1096, July.
    • Handle: RePEc:wly:emetrp:v:92:y:2024:i:4:p:1063-1096
    DOI: 10.3982/ECTA20484
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    Cited by:

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    3. Giovanna D'Adda & Simone Ferro & Tommaso Frattini & Alessio Romarri, 2026. "Riders in the Smog: How Air Pollution Affects Workers in Urban Environments," Development Working Papers 506, Centro Studi Luca d'Agliano, University of Milano, revised 13 May 2026.
    4. Aldeco Leo, Lorenzo & Ghilardi, Matteo F. & Tuesta, Hugo, 2026. "Labor market consequences of homicides: A gender perspective from Mexico," Journal of Development Economics, Elsevier, vol. 180(C).
    5. Dangel, Alexander & Goeschl, Timo, 2025. "Air Quality Alerts and Don't Drive Appeals: Evidence on Voluntary Pollution Mitigation Dynamics from Germany," Working Papers 0760, University of Heidelberg, Department of Economics.
    6. Zhu, Mingying & Chen, Bo & Hu, Zhiren & Du, Wei, 2025. "Greening through Tourism," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360758, Agricultural and Applied Economics Association.
    7. Linhui Wang & Zhanglu Cao & Hui Wang & Junsen Zhang & Jun Luo, 2025. "Air pollution, health, migration, and innovation: evidence from urban China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 38(3), pages 1-62, September.
    8. Arrizaga, Rubí & Clarke, Damian & Cubillos, Pedro & Ruiz-Tagle, J.Cristóbal, 2026. "Smoke signals: Understanding temporal dynamics of wildfire exposure on health and education," Journal of Environmental Economics and Management, Elsevier, vol. 138(C).
    9. Giovanna D'Adda & Simone Ferro & Tommaso Frattini & Alessio Romarri, 2025. "Riders in the Smog: How Air Pollution Affects Workers in Urban Environments," Working Papers wpdea2518, Department of Applied Economics at Universitat Autonoma of Barcelona.
    10. Wei, Haoran & Liu, Yulin, 2025. "The impact of climate risk on rural land transfer:Evidence from 360 Chinese villages," Land Use Policy, Elsevier, vol. 159(C).
    11. Dangel, Alexander & Goeschl, Timo, 2026. "Air quality alerts and don’t drive appeals: Evidence on voluntary pollution mitigation dynamics from Germany," Journal of Environmental Economics and Management, Elsevier, vol. 135(C).
    12. 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).
    13. Cavatassi, Romina & Garg, Teevrat & Graff Zivin, Joshua & Paolantonio, Adriana & Vargas, David & Wollburg, Philip, 2026. "Climate Change Adaptation and Development: A Conceptual Framework," IZA Discussion Papers 18464, IZA Network @ LISER.
    14. Rosello, Giulia & Reatini, Maria Antonietta & Pinto, Gabriele & Cattani, Giorgio, 2026. "Airless democracy: Air pollution and voter turnout," MERIT Working Papers 004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    15. Giulia Rossello & Maria Antonietta Reatini & Gabriele Pinto & Giorgio Cattani, 2026. "Airless Democracy: Air Pollution and Voter Turnout," Discussion Papers 2026/328, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    16. Edoardo Santoni & Margherita Scarlato & Nicolò Barbieri & Caterina Conigliani, 2025. "Heat and work-related injuries: How temperature measurement affects outcomes," SEEDS Working Papers 0225, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Mar 2025.
    17. Bogaard, Mariët & Künn, Steffen & Palacios, Juan & Pestel, Nico, 2024. "Polluted Job Search: The Impact of Poor Air Quality on Reservation Wages," IZA Discussion Papers 17344, IZA Network @ LISER.
    18. Piero Basaglia & Luis Sarmiento, 2025. "When the Boundary Layer Drops: Air Quality and Healthcare Use in Mexico," CESifo Working Paper Series 11901, CESifo.

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