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Weather, Labor Reallocation and Industrial Production: Evidence from India

Jonathan Colmer ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Temperature-driven reductions in the demand for agricultural labor are associated with increases in the share of workers engaged in manufacturing, suggesting that the ability of non-agricultural sectors to absorb workers may play a key role in attenuating the economic consequences of weather-driven changes in agricultural productivity. Exploiting firm-level variation in the propensity to absorb these workers, I find that this reallocation is associated with relative expansions in manufacturing activity in exible labor market environments. Counter-factual estimates suggest that in the absence of labor reallocation the aggregate consequences of temperature increases would be up to 40% higher.

Keywords: labor reallocation; agricultural productivity; labor regulation; industrial production (search for similar items in EconPapers)
JEL-codes: O13 Q54 J62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-env and nep-lab
Date: 2018-05
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