Climate Change and the Decline of Labor Share

Xincheng Qiu and Masahiro Yoshida ()
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Masahiro Yoshida: Waseda University

No 17485, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study the impact of climate change on the labor share. Using a newly constructed dataset combining US county-level labor shares with climate variables, we find that extreme temperatures reduce labor share. This adverse effect is more pronounced in industries with higher outdoor exposure and automation potential. We also show that extreme temperatures accelerate the adoption of industrial robots. Overall, climate change accounts for 14% of the decline in labor share during 2001–2019. In the last century, however, the opposing effects of decreased cold days and increased hot days offset each other, consistent with the well-documented constancy 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)
Pages: 52 pages
Date: 2024-11
New Economics Papers: this item is included in nep-env and nep-tid
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