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Climate Change and Labor Reallocation: Evidence from Six Decades of the Indian Census

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  • Maggie Liu
  • Yogita Shamdasani
  • Vis Taraz

Abstract

How do rising temperatures affect long-term labor reallocation in developing economies? In this paper we examine how increases in temperature impact structural transformation and urbanization within Indian districts between 1951 and 2011. We find that rising temperatures are associated with lower shares of workers in nonagricultural sectors, with effects intensifying over a longer time frame. Supporting evidence suggests that local demand effects play an important role: declining agricultural productivity under higher temperatures reduces the demand for nonagricultural goods and services, which subsequently lowers nonagricultural labor demand. Our results illustrate that rising temperatures limit sectoral and rural-urban mobility for isolated households.

Suggested Citation

  • Maggie Liu & Yogita Shamdasani & Vis Taraz, 2023. "Climate Change and Labor Reallocation: Evidence from Six Decades of the Indian Census," American Economic Journal: Economic Policy, American Economic Association, vol. 15(2), pages 395-423, May.
    • Handle: RePEc:aea:aejpol:v:15:y:2023:i:2:p:395-423
    DOI: 10.1257/pol.20210129
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    Citations

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    Cited by:

    1. Pham, Trinh, 2023. "Climate change and intersectoral labor reallocation in the presence of labor market frictions," 2023 Annual Meeting, July 23-25, Washington D.C. 335724, Agricultural and Applied Economics Association.
    2. Guimbeau, Amanda & Ji, Xinde James & Long, Zi & Menon, Nidhiya, 2023. "Ocean Salinity, Early-Life Health, and Adaptation," IZA Discussion Papers 16463, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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