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The Effect of Pollution on Labor Supply: Evidence from a Natural Experiment in Mexico City

  • Rema Hanna
  • Paulina Oliva

Moderate effects of pollution on health may exert an important influence on labor market decisions. 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 an 8 percent decline in pollution in the surrounding neighborhoods. We find that a one percent increase in sulfur dioxide results in a 0.61 percent decrease in the hours worked. The effects do not appear to be driven by labor demand shocks nor differential migration as a result of the closure in the areas located near the refinery.

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File URL: http://www.nber.org/papers/w17302.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17302.

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Date of creation: Aug 2011
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Publication status: published as 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:nbr:nberwo:17302
Note: EEE
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