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Conference Agenda

Overview and details of the sessions of this conference. Please select a date or location to show only sessions at that day or location. Please select a single session for detailed view (with abstracts and downloads if available).

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Daily Overview

Session

Egg-Timer: Environment, Innovation and Productivity
Location: D-110
Session Chair: Xiaofang Dong, Xiamen University

Presentation 4

Heat Stress and Labor Share: Evidence from Indian Manufacturing Firm

Garima Jasuja^1,2,3, Punarjit Roychowdhury^4,5,6, Francesco Bosello^1,2,3

1: CMCC Foundation - Euro-Mediterranean Center on Climate Change, Italy; 2: RFF-CMCC European Institute on Economics and the Environment, Italy; 3: Department of Environmental Sciences, Informatics and Statistics, Ca’ Foscari University of Venice, Italy.; 4: Department of Economics, School of Humanities and Social Sciences, Shiv Nadar University, India.; 5: Global Labor Organization, Germany.; 6: CDES, Monash University, Australia.

Climate change poses significant challenges to labor 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 labor share—measured as labor 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 labor share, with results robust across alternative specifications. This decline is driven primarily by production adjustments, especially capital-labor substitution. We also present suggestive evidence that heat stress may strengthen firms’ market power and interact with labor regulations in shaping firm responses. Combining our estimates with climate projections, future warming is likely to intensify labor share declines across regions. Our findings identify climate change as an important and underexplored driver of distributional change in developing economies.