Temperature, labor reallocation, and industrial production: evidence from India
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. (JEL J23, J43, L60, O13, O14, Q54, Q56) ? 2021. All Rights Reserved.
1 October 2021
American Economic Journal: Applied Economics 13(4) , pp.101-124, 2021
https://www.aeaweb.org/articles?id=10.1257/app.20190249
This Journal article is published under the centre's Growth programme.