Working Paper: CEPR ID: DP17604
Authors: Vittorio Bassi; Matthew E. Kahn; Nancy Lozano Gracia; Tommaso Porzio; Jeanne Sorin
Abstract: In developing countries, most manufacturing firms are small and located in high-density urban areas, often near congested streets. To study the determinants and implications of this location choice, we collect a novel firm survey and detailed air pollution measurements within Ugandan cities. We find that firms locate on the busiest roads searching for customer visibility, but in doing so they expose their workers to substantial pollution. This sorting pattern increases profits, but with severe health costs: if firms were randomly located across space, annual profits would decrease by $195 for the average firm, but its workers' life expectancy would increase by two months.
Keywords: Air Pollution; Uganda
JEL Codes: O12; Q53; R30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm location (R30) | customer visibility (L81) |
| customer visibility (L81) | profits (L21) |
| firm location (R30) | profits (L21) |
| firm location (R30) | worker exposure to pollution (J28) |
| worker exposure to pollution (J28) | adverse health outcomes (I14) |
| managerial ability (M54) | adaptation strategies (O36) |
| adaptation strategies (O36) | worker exposure to pollution (J28) |