Impacts of Piped Water Shortages on Labor Supply: Evidence from Mexico City

Urban water shortages are an increasingly urgent challenge in large cities, driven by population growth, climate change, and aging infrastructure. In Mexico City—where households lack alternative sources—disruptions to piped supply force residents to either wait at home for public deliveries or spend money on private water trucks and bottled water. These shocks can affect both time and income, creating theoretically ambiguous effects on labor supply. This paper provides novel causal evidence on how piped water shortages affect urban labor supply. I combine high-frequency labor panel data with a proxy that interacts rainfall-driven variation in reservoir storage with each block’s location within Mexico City’s gravity-fed pipeline network. This variation predicts changes in residential water consumption. A drop in reservoir levels from the median to the fifth percentile reduces weekly hours worked by about one hour, on average. Effects are heterogeneous: female formal employees—with access to job protections—reduce hours worked (time effect dominates), while female informal employees increase hours (income effect dominates). These findings highlight how gender roles and job informality mediate labor supply responses to water insecurity in urban settings.