The Impact of Temperature on Productivity and Labor Supply: Evidence from Indian Manufacturing

2021/01/26 by E. Somanathan, Rohini Somanathan, Anant Sudarshan +1 · 15 citations
Economics, Econometrics and Finance · Agricultural and Biological Sciences · Health Professions · #Climate Change Policy and Economics #Agricultural risk and resilience #Global Health Care Issues

paper · doi:10.1086/713733

openalex publication_date 2021/01/26 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29

Abstract

Hotter years are associated with lower economic output in developing countries. We show that the effect of temperature on labor is an important part of the explanation. Using microdata from selected firms in India, we estimate reduced worker productivity and increased absenteeism on hot days. Climate control significantly mitigates productivity losses. In a national panel of Indian factories, annual plant output falls by about 2% per degree Celsius. This response appears to be driven by a reduction in the output elasticity of labor. Our estimates are large enough to explain previously observed output losses in cross-country panels.

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