Air pollution and agricultural labor supply: Evidence from China

Abstract

Research on avoidance behaviors related to air pollution, particularly among low-income groups in developing countries, is relatively limited. This study aims to analyze the connection between air pollution and farmer labor supply in China, while also examining the labor relocation effect. The identification strategy relies on a widely used instrument variable, namely that thermal inversion exerts a plausibly exogenous shock on air quality. Two-stage least squares regression results indicate that at the intensive margin, farmer working hours in agricultural work during their busy farming seasons are reduced by 0.4 h/day for a 10 μg/m3 increment in PM2.5, whereas at the extensive margin, their working days in agricultural work throughout the year are reduced by 2.7 days for a 1 μg/m3 increase in the yearly average PM2.5 concentration. We also consider the labor relocation effect, as farmers are likely to shift their labor supply from agriculture to indoor off-farm work to avoid pollution damage. These findings add to the negative social externality of air pollution and expand the determinants of the agricultural labor supply.