A Cold Stop: Temperature, Unemployment and Joblessness Dynamics

We provide new evidence that short-run temperature shocks affect unemployment dynamics. Linking daily weather data with three decades of Current Population Survey microdata, we show that cold, but not hot, temperatures significantly increase unemployment risk. This effect is concentrated in climate-exposed industries and driven by both increased job separations and longer unemployment durations. Separations appear to be driven by a rise in layoffs rather than quits, while the increase in unemployment duration is largely explained by a decline in employer vacancy postings. Taken together, temperature-induced joblessness dynamics are primarily demand-driven, rather than a result of changes in worker behavior.