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Particulate matter and labor supply: evidence from Peru

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Abstract

This paper examines the effect of air pollution on labor supply using the case of Lima, Peru. We focus on fine particulate matter (PM2.5), an important air pollutant, and show that moderate levels of pollution reduce hours worked for working adults. The effect is concentrated among households with susceptible dependents, i.e., small children and elderly adults. This indicates that caregiving is likely a mechanism linking air pollution to labor supply. We find no evidence of intra-household attenuation behavior. For instance, there is no re-allocation of labor across household members, and earnings decrease. Finally, we show evidence of non-linearities in the dose response function: at higher concentrations, households without susceptible dependents also start experiencing negative effects.

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  • Fernando M. Aragon & Juan Jose Miranda & Paulina Oliva, 2016. "Particulate matter and labor supply: evidence from Peru," Discussion Papers dp16-01, Department of Economics, Simon Fraser University.
    • Handle: RePEc:sfu:sfudps:dp16-01
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    2. Younoh Kim & James Manley & Vlad Radoias, 2017. "Medium- and long-term consequences of pollution on labor supply: evidence from Indonesia," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-15, December.
    3. Julia Rechlitz & Luis Sarmiento & Aleksandar Zaklan, 2020. "Make Sure the Kids are OK: Indirect Effects of Ground-Level Ozone on Well-Being," Discussion Papers of DIW Berlin 1877, DIW Berlin, German Institute for Economic Research.
    4. Simiao Chen & David E Bloom, 2019. "The macroeconomic burden of noncommunicable diseases associated with air pollution in China," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-14, April.
    5. Luis Sarmiento, 2020. "I Am Innocent: Hourly Variations in Air Pollution and Crime Behavior," Discussion Papers of DIW Berlin 1879, DIW Berlin, German Institute for Economic Research.
    6. 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).
    7. Matthew E. Kahn & Nancy Lozano‐Gracia & Maria Edisa Soppelsa, 2021. "Pollution'S Role In Reducing Urban Quality Of Life In The Developing World," Journal of Economic Surveys, Wiley Blackwell, vol. 35(1), pages 330-347, February.

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    More about this item

    Keywords

    pollution; labor supply; cost of pollution;
    All these keywords.

    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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