Working Paper: NBER ID: w29952
Authors: Mark Borgschulte; David Molitor; Eric Zou
Abstract: We study how air pollution impacts the U.S. labor market by analyzing effects of drifting wildfire smoke that can affect populations far from the fires themselves. We link satellite smoke plumes with labor market outcomes to estimate that an additional day of smoke exposure reduces quarterly earnings by about 0.1 percent. Extensive margin responses, including employment reductions and labor force exits, can explain 13 percent of the overall earnings losses. The implied welfare cost of lost earnings due to air pollution exposure is on par with standard valuations of the mortality burden. The findings suggest that labor market channels warrant greater consideration in policy responses to air pollution.
Keywords: Air Pollution; Labor Market; Wildfire Smoke; Earnings; Employment
JEL Codes: J21; Q51; Q52; Q53; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Lost earnings due to pollution (Q52) | Social welfare cost (H53) |
| Wildfire smoke exposure (I12) | Reduction in quarterly per capita earnings (J39) |
| Wildfire smoke exposure (I12) | Decrease in employment (J63) |
| Wildfire smoke exposure (I12) | Reduction in labor force participation (LFP) (J22) |
| 1 µg/m3 increase in quarterly PM2.5 concentrations (C21) | Reduction in per capita earnings (J39) |
| 1 µg/m3 increase in quarterly PM2.5 concentrations (C21) | Decrease in employment (J63) |
| 1 µg/m3 increase in quarterly PM2.5 concentrations (C21) | Reduction in labor force participation (LFP) (J22) |