Air Pollution and the Labor Market: Evidence from Wildfire Smoke

We study how air pollution impacts the U.S. labor market by analyzing the effects of drifting wildfire smoke. We link satellite-based smoke plume data with labor market outcomes to estimate that an additional day of smoke exposure reduces quarterly earnings by about 0.1%. Extensive margin responses,...

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Bibliographic Details
Published in:The review of economics and statistics 2024-11, Vol.106 (6), p.1558-1575
Main Authors: Borgschulte, Mark, Molitor, David, Zou, Eric Yongchen
Format: Article
Language:English
Subjects:
Air pollution
Earnings
Employment
Forest & brush fires
Labor force
Labor market
Welfare
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Summary:We study how air pollution impacts the U.S. labor market by analyzing the effects of drifting wildfire smoke. We link satellite-based smoke plume data with labor market outcomes to estimate that an additional day of smoke exposure reduces quarterly earnings by about 0.1%. Extensive margin responses, including employment reductions and labor force exits, explain 13% of the overall earnings losses. The implied welfare costs from lost earnings due to air pollution exposure is on par with standard valuations of the mortality burden. The findings highlight the importance of labor market channels in air pollution policy responses.
ISSN:0034-6535
1530-9142
DOI:10.1162/rest_a_01243