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Particulate matter and labor supply: evidence from Peru

Fernando Aragon (), Juan Jose Miranda and Paulina Oliva ()

Discussion Papers from Department of Economics, Simon Fraser University

Abstract: This paper examines the effect of air pollution on labor supply using the case of Lima, Peru. We focus on fine particulate matter (PM2.5), an important air pollutant, and show that moderate levels of pollution reduce hours worked for working adults. The effect is concentrated among households with susceptible dependents, i.e., small children and elderly adults. This indicates that caregiving is likely a mechanism linking air pollution to labor supply. We find no evidence of intra-household attenuation behavior. For instance, there is no re-allocation of labor across household members, and earnings decrease. Finally, we show evidence of non-linearities in the dose response function: at higher concentrations, households without susceptible dependents also start experiencing negative effects.

Keywords: pollution; labor supply; cost of pollution (search for similar items in EconPapers)
JEL-codes: Q52 Q53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-env and nep-lma
Date: 2016-02
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