Particulate Matter and Labor Supply: The Role of Caregiving and Non-Linearities

46 Pages Posted: 29 Apr 2016

See all articles by Fernando M. Aragon

Fernando M. Aragon

Simon Fraser University (SFU) - Department of Economics

Juan Jose Miranda

World Bank

Paulina Oliva

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

Date Written: April 28, 2016

Abstract

This paper examines the effect of air pollution on labor supply in Lima, Peru. It focuses on fine particulate matter (PM2.5), an important pollutant for health according to the medical literature, and shows that moderate levels of pollution reduce hours worked for working adults. The research design takes advantage of rich household panel data in labor outcomes to address omitted variables and allows investigation of whether the response to air pollution is non-linear. The analysis finds that the effect of moderate pollution levels on hours worked is concentrated among households with susceptible dependents, that is small children and elderly adults, while the highest concentrations affect all households. This suggests that caregiving is likely a mechanism linking air pollution to labor supply at moderate levels. Further evidence of this mechanism is provided using DHS data on children morbidity for the same time period. Finally, no evidence is found of intra-household attenuation behavior. For instance, there is no re-allocation of labor across household members, and earnings decrease with air pollution.

Keywords: Environment and Health, Labor Markets, Pollution Management & Control, Rural Labor Markets, Brown Issues and Health

Suggested Citation

Aragon, Fernando M. and Miranda, Juan Jose and Oliva, Paulina, Particulate Matter and Labor Supply: The Role of Caregiving and Non-Linearities (April 28, 2016). World Bank Policy Research Working Paper No. 7658, Available at SSRN: https://ssrn.com/abstract=2772318

Fernando M. Aragon (Contact Author)

Simon Fraser University (SFU) - Department of Economics ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada

Juan Jose Miranda

World Bank ( email )

1818 H Street NW
Washington, DC 20433
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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