Medium- and long-term consequences of pollution on labor supply: evidence from Indonesia

Abstract

We use a natural experiment in Indonesia to study the medium-and long-term effects of air pollution on labor supply. We find that exposure to air pollution reduces hours worked and while the medium-term effects are larger in magnitude, some effects do persist in the long term. More interestingly, we are able to provide some insight regarding the underlying channels that contribute to the reduced labor supply. Own health seems to be the only responsible channel in the long term, while in the medium term, a different channel based on dependent caregiving is the most important. JEL Classification: J22, Q53

Did Haze Pollution Harm the Quality of Economic Development?—An Empirical Study Based on China’s PM2.5 Concentrations

“…Aside from damaging the health of laborers themselves, the long-term exposure to severe air pollution may also compel the adult laborers to spend more time caring for infected children and elders, thereby resulting in an increased absenteeism and shortened working hours. Kim et al [24] studied the medium-and long-term effects of air pollution on labor supply based on a natural experiment of the 1997 Indonesian forest fires. They found that the exposure to air pollution shortened the working hours of laborers, and that the parents with children were more prone to working hour reductions during severe pollution incidents.…”

Environmental sustainability and decent work

“…Air pollution thus increases gender inequality in the labour market (Montt, 2018). The health effects of intense air pollution persist in the long term, even ten years after exposure (Kim, Manley and Radoias, 2017). Taking into account only premature deaths, air pollution costs the world economy about US$ 225 billion in lost labour income and US$ 5 trillion in welfare losses.…”

Early-life environment and human capital: evidence from the Philippines

“…Extensive evidence links weather and pollution to health outcomes (Deschênes et al , 2009), and recent studies link pollution (Allen et al , 2017), temperature (Graff Zivin et al , 2018) and precipitation (Maccini and Yang, 2009) to cognition and schooling. The effects of temperature and precipitation on labor market outcomes have been extensively examined (Dell et al , 2014), and there is also evidence that pollution impacts labor market outcomes (Kim et al , 2017). While the long-term human capital effects of weather have been explored (Graff Zivin and Neidell, 2013), few studies have examined the long-term human capital effects of early-life pollution exposure (Currie et al , 2014), with fewer making the link to labor market outcomes (Kim et al , 2017).…”

“…The effects of temperature and precipitation on labor market outcomes have been extensively examined (Dell et al , 2014), and there is also evidence that pollution impacts labor market outcomes (Kim et al , 2017). While the long-term human capital effects of weather have been explored (Graff Zivin and Neidell, 2013), few studies have examined the long-term human capital effects of early-life pollution exposure (Currie et al , 2014), with fewer making the link to labor market outcomes (Kim et al , 2017).…”

“…While previous studies have examined either weather or pollution, we examine both because of their close relationship. And we look at both human capital and labor market outcomes because of the extensive evidence linking human capital to labor market outcomes (Strauss and Thomas, 1998), and the limited evidence of how environmental factors affect each (Kim et al , 2017).…”