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Moderate effects of pollution on health may exert important influences on work. 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 a 19.7% decline in pollution, as measured by SO2, in the surrounding neighborhoods. The closure led to a 1.3 h (or 3.5%) increase in work hours per week. The effects do not appear to be driven by differential labor demand shocks nor selective migration.


Hanna, Rema, and Paulina Oliva. "The Effect of Pollution on Labor Supply: Evidence from a Natural Experiment in Mexico City." Journal of Public Economics 122 (February 2015): 68-79.