The unequal effects of pollution on daily labour supply


Published 21.09.22

In response to high pollution, workers reduce their labour supply, but by differing amounts

Read “Exposure or income? The unequal effects of pollution on daily labour supply” by Bridget Hoffmann and Juan Pablo Rud here.

Air pollution is the largest environmental risk to health, and is a key concern for policymakers in urban settings in low and middle income countries. In this VoxDevTalks, Bridget Hoffmann and Juan Pablo Rud join us to discuss their work in which they study how air pollution shapes the labour supply decisions of individuals in Mexico City. Their results show that, on days with high pollution, the average worker experiences a reduction of around 7.5% of working hours. Importantly, this effect is heterogeneous, with informal workers reducing their contemporaneous labour supply by significantly less than formal workers, but experiencing worse health impacts on these high pollution days and therefore working fewer hours over subsequent days. They demonstrate that avoidance behaviour can explain this pattern, with labour supply decisions reflecting workers’ decisions rather than resulting from public policy.