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Climate Change and the Decline of Labor Share

Author

Listed:
  • Qiu, Xincheng

    (Peking University)

  • Yoshida, Masahiro

    (Waseda University)

Abstract

We study the impact of climate change on the labor share. Using a newly constructed dataset combining US county-level labor shares with climate variables, we find that extreme temperatures reduce labor share. This adverse effect is more pronounced in industries with higher outdoor exposure and automation potential. We also show that extreme temperatures accelerate the adoption of industrial robots. Overall, climate change accounts for 14% of the decline in labor share during 2001–2019. In the last century, however, the opposing effects of decreased cold days and increased hot days offset each other, consistent with the well-documented constancy of labor share.

Suggested Citation

  • Qiu, Xincheng & Yoshida, Masahiro, 2024. "Climate Change and the Decline of Labor Share," IZA Discussion Papers 17485, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp17485
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    References listed on IDEAS

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    Cited by:

    1. Similan Rujiwattanapong & Masahiro Yoshida, 2025. "Climate Change and Unemployment Seasonality: Evidence from US Counties," Working Papers 2512, Waseda University, Faculty of Political Science and Economics.

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    Keywords

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    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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