Pollution in Ugandan cities: Do managers avoid it or adapt in place?

Developing countries suffer from rising urban pollution levels, with associated negative effects on health and worker productivity. We study how managers in developing country cities cope with the polluted environment. We collect high resolution pollution measurements within Ugandan cities and match these with a novel firm survey. We find that firms locate in close proximity to major polluted roads, which bundle a bad (exposure to pollution) with a good (market demand). Higher ability managers do not avoid polluted areas, but better adapt to the pollution by protecting their workers through both provision of equipment and flexibility in work schedules.