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Weather, Labor Reallocation and Industrial Production: Evidence from India

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  • Jonathan Colmer

Abstract

Temperature-driven reductions in the demand for agricultural labor are associated with increases in the share of workers engaged in manufacturing, suggesting that the ability of non-agricultural sectors to absorb workers may play a key role in attenuating the economic consequences of weather-driven changes in agricultural productivity. Exploiting firm-level variation in the propensity to absorb these workers, I find that this reallocation is associated with relative expansions in manufacturing activity in exible labor market environments. Counter-factual estimates suggest that in the absence of labor reallocation the aggregate consequences of temperature increases would be up to 40% higher.

Suggested Citation

  • Jonathan Colmer, 2018. "Weather, Labor Reallocation and Industrial Production: Evidence from India," CEP Discussion Papers dp1544, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1544
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Fernando M. Aragón & Francisco Oteiza & Juan Pablo Rud, 2018. "Climate Change and Agriculture: Farmer Adaptation to Extreme Heat," Discussion Papers dp18-02, Department of Economics, Simon Fraser University.
    2. Imbert, Clément & Papp, John, 2016. "Short-term Migration Rural Workfare Programs and Urban Labor Markets - Evidence from India," The Warwick Economics Research Paper Series (TWERPS) 1116, University of Warwick, Department of Economics.
    3. 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.
    4. Fernando M. Aragón & Francisco Oteiza & Juan Pablo Rud, 2018. "Climate change and agriculture: farmer adaptation to extreme heat," IFS Working Papers W18/06, Institute for Fiscal Studies.
    5. Marco Letta & Richard S. J. Tol, 2019. "Weather, Climate and Total Factor Productivity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 283-305, May.
    6. Fernando M. Arag'on & Francisco Oteiza & Juan Pablo Rud, 2019. "Climate Change and Agriculture: Subsistence Farmers' Response to Extreme Heat," Papers 1902.09204, arXiv.org, revised Feb 2019.
    7. Garg, Teevrat & Gibson, Matthew & Sun, Fanglin, 2019. "Extreme Temperatures and Time-Use in China," IZA Discussion Papers 12372, Institute of Labor Economics (IZA).
    8. Carillo, Mario Francesco, 2018. "Agricultural policy and long-run development: evidence from Mussolini's Battle for Grain," MPRA Paper 88941, University Library of Munich, Germany.
    9. Solomon Hsiang & Paulina Oliva & Reed Walker, 2019. "The Distribution of Environmental Damages," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(1), pages 83-103.
    10. Alem, Yonas & Colmer, Jonathan, 2018. "Consumption smoothing and the welfare cost of uncertainty," Ruhr Economic Papers 780, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

    More about this item

    Keywords

    labor reallocation; agricultural productivity; labor regulation; industrial production;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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