Working Paper: NBER ID: w17302
Authors: Rema Hanna; Paulina Oliva
Abstract: 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.
Keywords: pollution; labor supply; natural experiment; Mexico City
JEL Codes: O0; Q0; Q5; Q53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pollution levels (Q53) | labor supply (J20) |
| closure of refinery (L71) | pollution levels (Q53) |
| closure of refinery (L71) | labor supply (J20) |