Climate Change and the Decline of Labor Share

Xincheng Qiu and Masahiro Yoshida

No 26143, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: We study the impact of climate change on the labor share. Combining newly constructed US county-industry-level labor shares with climate variables, we find that extreme temperatures reduce the labor share, with stronger effects in industries with higher climate exposure and automation potential. Extreme temperatures also accelerate robot adoption. A back-of-the-envelope calculation suggests that the within-county-industry response to climate change accounts for 15% of the decline in labor share since 2000. Over the 20th century, however, the opposing effects of decreased cold days and increased hot days offset each other, consistent with the historical stability of labor share.

Keywords: climate change; labor share; automation (search for similar items in EconPapers)
JEL-codes: E25 O33 Q54 (search for similar items in EconPapers)
Date: 2026-05
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Persistent link: https://EconPapers.repec.org/RePEc:crm:wpaper:26143

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