Citation
Hanna, Rema, and Paulina Oliva. 2015. “The Effect Of Pollution On Labor Supply: Evidence From A Natural Experiment In Mexico”. The Journal Of Public Economics 122 (February 2015): 68-79.
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.