Wildfires, Smoky Days, and Labor Supply by Ron Chan (University of Manchester)

The study  focus on the impact of air pollution on labor supply in Chile. The exogenous incidence of wildfires between 2010 and 2018 is used to identify the causal impact of air pollution on labor supply besides complementing the literature that focuses on health or worker productivity and empirically estimate the economic costs of air pollution. Adopted a reduced form approach to estimate the economic impact of experiencing an additional smoky day on the number of hours worked, based on the random assignment of the day of visit for the National Labor Survey and the exogenous occurrence of wildfires. It was found that an extra smoky day leads to a 2.3% reduction in hours worked for the average Chilean worker, with limited rebound effects in the following weeks. The effect
is more substantial for workers mainly involved in outdoor tasks (such as agriculture), female workers, and poor households, where hours worked can decrease by 3.7 to 6.5 percent. These results compound on existing results on productivity, suggesting that air pollution may have a more important impact on production than previously thought.