Macroeconomics

Labour economics

Demography

Panel data

Output elasticity

Microdata (statistics)

Census

Economics

Absenteeism

Management

Demographic economics

Econometrics

Productivity

Population

Sociology

Agricultural economics

Production (economics)

Journal of Political Economy

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

The Impact of Temperature on Productivity and Labor Supply: Evidence from Indian Manufacturing