Productivity Impact of Temperature Change: Evidence from the Indonesian Household-based Enterprises Survey

Elan Satriawan (), Esa Azali Asyahid (), Wisnu Setiadi Nugroho (), Rimawan Pradiptyo () and Ranjan Shrestha ()
Additional contact information
Elan Satriawan: Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada
Esa Azali Asyahid: Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada
Wisnu Setiadi Nugroho: Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada
Rimawan Pradiptyo: Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada
Ranjan Shrestha: Department of Economics, College of Arts and Sciences, The College of William & Mary

No 202507007, Gadjah Mada Economics Working Paper Series from Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada

Abstract: This study examines the impact of temperature on labor productivity in Indonesian household-based enterprises. We combine data on micro and small enterprises from the Indonesian Family Life Survey with historical temperature data to estimate the effect of an increase in temperature on labor productivity, proxied by revenue per worker. Our empirical strategy relies on plausibly exogenous temporal variations in temperature within each geographic area. The results indicate that holding an enterprise’s production function fixed, a 1 °C increase in the 12-month average temperature reduces revenue per worker by 16%. Additional analyses using deviations from long-term monthly average temperatures, which reduce seasonality concerns, yield similar results, as year-month fixed effects are already incorporated. The findings highlight the significant impact of temperature changes on labor productivity in vulnerable economic sectors, emphasizing the need for targeted policies to enhance climate resilience in Indonesia's household-based enterprises.

Keywords: Climate Change; Indonesia; Indonesian Family Life Survey (IFLS); Micro and Small Household-based Enterprises (search for similar items in EconPapers)
JEL-codes: I31 Q51 Q54 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2025-07
New Economics Papers: this item is included in nep-sea
References: Add references at CitEc
Citations:

Forthcoming

Downloads: (external link)
https://drive.google.com/file/d/1x6tmRQ0mdIxqwaKG5 ... K4h/view?usp=sharing First version, 2025 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gme:wpaper:202507007

Access Statistics for this paper

More papers in Gadjah Mada Economics Working Paper Series from Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada Contact information at EDIRC.
Bibliographic data for series maintained by Dwi Rahmadi Nur Fathoni ().