Air Pollution and Agricultural Labor Supply : Evidence from China

Studies on avoidance behaviors in response to air pollution, particularly for low-income groups in developing countries, are relatively sparse. This study attempted to analyze the link between air pollution and farmer labor supply in China and further examined the labor relocation effect. The implemented identification strategy relies on a widely used instrument variable, namely that thermal inversion exerts a plausibly exogenous shock on air quality on a daily basis. 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 0.07 hours/day for a 1 μg/m 3 increment in PM 2.5 , whereas at the extensive margin, their working days in agricultural work during the entire year are reduced by 4.6 days for a 1 μg/m 3 increase in the yearly average PM 2.5 concentration. We also consider the labor relocation effect because 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 extend the determinants of the agricultural labor supply