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The Impact Of Temperature On Productivity And Labor Supply - Evidence From Indian Manufacturing

Author

Listed:
  • Anant Sudarshan

    (Department of Economics, University of Chicago and Energy Policy Institute at Chicago)

  • E. Somanathan

    (Economics and Planning Unit, Indian Statistical Institute)

  • Rohini Somanathan

    (Departments of Economics, Delhi School of Economics, University of Delhi, India)

  • Meenu Tewari

    (University of North Carolina, Chapel Hill)

Abstract

Cross-country studies have found that hotter years are associated with lower output in poor countries. Using high-frequency micro-data from manufacturing firms in India, we show that worker heat stress can substantially explain this correlation. Ambient temperatures have non-linear effects on worker productivity, with declines on hot days of 4 to 9 percent per degree rise in temperature. Sustained heat also increases absenteeism. Similar temperature induced productivity declines are replicated in annual plant output from a national panel. Our estimates imply that warming between 1971 and 2009 may have decreased manufacturing output in India by at least 3 percent relative to a no-warming counterfactual.

Suggested Citation

  • Anant Sudarshan & E. Somanathan & Rohini Somanathan & Meenu Tewari, 2015. "The Impact Of Temperature On Productivity And Labor Supply - Evidence From Indian Manufacturing," Working papers 244, Centre for Development Economics, Delhi School of Economics.
  • Handle: RePEc:cde:cdewps:244
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    References listed on IDEAS

    as
    1. Sanghamitra Das & Kala Krishna & Sergey Lychagin & Rohini Somanathan, 2013. "Back on the Rails: Competition and Productivity in State-Owned Industry," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 136-162, January.
    2. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    3. Joshua Graff Zivin & Matthew Neidell, 2014. "Temperature and the Allocation of Time: Implications for Climate Change," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 1-26.
    4. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2012. "Temperature Shocks and Economic Growth: Evidence from the Last Half Century," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 66-95, July.
    5. Joshua Graff Zivin & Matthew Neidell, 2012. "The Impact of Pollution on Worker Productivity," American Economic Review, American Economic Association, vol. 102(7), pages 3652-3673, December.
    6. Maximilian Auffhammer & Solomon M. Hsiang & Wolfram Schlenker & Adam Sobel, 2013. "Using Weather Data and Climate Model Output in Economic Analyses of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(2), pages 181-198, July.
    7. Achyuta Adhvaryu & Namrata Kala & Anant Nyshadham, 2018. "The Light and the Heat: Productivity Co-benefits of Energy-saving Technology," NBER Working Papers 24314, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alan Barreca & Karen Clay & Olivier Deschenes & Michael Greenstone & Joseph S. Shapiro, 2013. "Adapting to Climate Change: The Remarkable Decline in the U.S. Temperature-Mortality Relationship over the 20th Century," NBER Working Papers 18692, National Bureau of Economic Research, Inc.
    2. Fu, Shihe & Viard, Brian & Zhang, Peng, 2017. "Air Quality and Manufacturing Firm Productivity: Comprehensive Evidence from China," MPRA Paper 78914, University Library of Munich, Germany.
    3. Park, Jisung & Bangalore, Mook & Hallegatte, Stephane & Sandhoefner, Evan, 2018. "Households and heat stress: estimating the distributional consequences of climate change," Environment and Development Economics, Cambridge University Press, vol. 23(03), pages 349-368, June.
    4. Francesco Lamperti & Giovanni Dosi & Mauro Napoletano & Andrea Roventini & Alessandro Sapio, 2018. "And Then He Wasn't a She: Climate Change and Green Transitions in an Agent-Based Integrated Assessment Model," LEM Papers Series 2018/14, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. repec:eee:jeborg:v:150:y:2018:i:c:p:432-445 is not listed on IDEAS
    6. Sharma, Smriti & Tarp, Finn, 2018. "Does managerial personality matter? Evidence from firms in Vietnam," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 432-445.
    7. Zhang, Peng & Deschenes, Olivier & Meng, Kyle & Zhang, Junjie, 2018. "Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 1-17.
    8. Alan Barreca & Karen Clay & Olivier Deschenes & Michael Greenstone & Joseph S. Shapiro, 2016. "Adapting to Climate Change: The Remarkable Decline in the US Temperature-Mortality Relationship over the Twentieth Century," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 105-159.
    9. Jonathan Colmer, 2018. "Weather, Labor Reallocation and Industrial Production: Evidence from India," CEP Discussion Papers dp1544, Centre for Economic Performance, LSE.
    10. repec:col:000090:015697 is not listed on IDEAS
    11. S. Nazrul Islam & John Winkel, 2017. "Climate Change and Social Inequality," Working Papers 152, United Nations, Department of Economics and Social Affairs.
    12. Colmer, Jonathan, 2018. "Weather, labor reallocation and industrial production: evidence from India," LSE Research Online Documents on Economics 88695, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    temperature; heat stress; worker productivity; climate change;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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