The Impact of Air Pollution on Labor Participation of the Elderly: Evidence from China

Abstract

Based on the three-year survey data from China Health and Retirement Longitudinal Study (CHARLS) database, in combination with the environmental statistical data of 122 cities, this study empirically tests the effect of air pollution on the labor participation of the elderly and the mechanism. Using the panel data model, two-way fixed effect method, and instrumental variable method, the results show that air pollution significantly reduces the labor participation of the elderly, with a decrement of 0.43%. With the respect of transmission mechanisms, air pollution affects the overall labor participation behavior of the elderly mainly through the number of working days per week and working hours per day. At the same time, along with the cumulating of the days of Air Quality Index (AQI) [Formula: see text], the labor participation of the elderly is significantly reduced. In addition, the impact of air pollution on the labor participation of the elderly shows apparent heterogeneity divided by the gender, education level, urban-rural, and regional economic-level, and there are obvious substitution effects and income effects. This study confirms that air pollution affects the total labor participation of the elderly through the number of working days per week and working hours per day, and this impact reaches a peak when AQI is in the range from 100 to 150.