To what degree can labor reallocation mitigate the economic consequences of weather-driven agricultural productivity shocks? I estimate that temperature-driven reductions in the demand for agricultural labor in India are associated with increases in nonagricultural employment. This suggests that the ability of nonagricultural sectors to absorb workers may play a key role in attenuating the economic consequences of agricultural productivity shocks. Exploiting firm-level variation in the propensity to absorb workers, I estimate relative expansions in manufacturing output in more flexible labor markets. Estimates suggest that, in the absence of labor reallocation, local economic losses could be up to 69 percent higher.
"Temperature, Labor Reallocation, and Industrial Production: Evidence from India."
American Economic Journal: Applied Economics,
Legal Monopolies and Regulation or Deregulation
Industry Studies: Manufacturing: General
Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Industrialization; Manufacturing and Service Industries; Choice of Technology
Climate; Natural Disasters and Their Management; Global Warming
Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth