The impact of temperature on productivity and labour supply: evidence from Indian manufacturing

E. Somanathan, Rohini Somanathan, Anant Sudarshan and Meenu Tewari

Chapter 5 in Global Value Chains and Climate Change, 2025, pp 87-143 from Edward Elgar Publishing

Abstract: Abstract: Hotter years are associated with lower economic output in developing countries. We show that the effect of temperature on labour 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 labour. Our estimates are large enough to explain previously observed output losses in cross-country panels.

Keywords: Climate; Global Warming; Environment and Trade; Environmental Equity; Time Allocation and Labour Supply; Labour Productivity (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035310951
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