Heat stress and labour share: evidence from Indian manufacturing

Garima Jasuja, Punarjit Roychowdhury and Francesco Bosello

No wp-2026-88, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Climate change poses significant challenges to labour markets in developing countries, where workers face high exposure to extreme heat and firms have limited adaptive capacity. This paper examines how heat stress affects the labour share—measured as labour compensation relative to firm sales—using a large panel of Indian manufacturing firms. Exploiting within-firm temperature variation over time, we find that heat stress significantly reduces the labour share, with results robust across alternative specifications.

Keywords: India; Climate change; Labour market; Manufacturing firms; Temperature (search for similar items in EconPapers)
Date: 2026
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