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

58 Pages Posted: 29 Aug 2011 Last revised: 1 Sep 2013

See all articles by Rema Hanna

Rema Hanna

Harvard University - Harvard Kennedy School (HKS)

Paulina Oliva

University of California, Santa Barbara (UCSB) - Department of Economics

Date Written: August 2011

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.

Suggested Citation

Hanna, Rema and Oliva, Paulina, The Effect of Pollution on Labor Supply: Evidence from a Natural Experiment in Mexico City (August 2011). NBER Working Paper No. w17302. Available at SSRN: https://ssrn.com/abstract=1918633

Rema Hanna (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Paulina Oliva

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States

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