Man or Machine?
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World Bank, Washington, DC
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This paper uses an exogenous shock to
wages from the world’s largest anti-poverty program to show
that higher wages can lead to increased air pollution,
likely by inducing farmers to shift into a labor-saving and
mechanized production process. Using a
difference-in-differences approach on the staggered roll-out
of India’s Mahatma Gandhi National Rural Employment
Guarantee Act (MNREGA), combined with data on nearly 1
million fires, the paper shows that the frequency of
agricultural fires increases by 21 percent after the shock.
The increase in fires is concentrated in districts that
appear more likely to mechanize the harvest. MNREGA did not
lead to changes in area planted or tonnage produced in fire
intensive crops. The estimates show that nationally, the
shock increased the rate of particulate emissions from
biomass burning by 30 to 50 percent. The results suggest
that absent policies to correct for environmental
externalities of mechanization at all stages of development,
labor market shocks may lead to inefficient levels of mechanization.
Palabras clave
AIR POLLUTION, MAHATMA GHANDI NATIONAL RURAL EMPLOYMENT GUARANTEE ACT, POVERTY REDUCTION, STRUCTURAL CHANGE, AGRICULTURE, AGRICULTURAL FIRE, MECHANIZED AGRICULTURE, RURAL LABOR MARKET SHOCKS