Abstract:

This paper develops the first globally comprehensive and empirically grounded estimates of worker disutility due to future temperature increases caused by climate change. Harmonizing daily worker-level data from seven countries representing nearly a third of the world’s population, we first evaluate the causal effect of daily temperature on labor supply, recovering an inverted U-shaped relationship where extreme cold and hot temperatures lead to labor supply losses for workers in weather-exposed industries. We then develop the first micro-founded, global estimates for how future climate change will impact workers, accounting for expected shifts in the global workforce towards less weather-exposed industries. Interpreting labor supply impacts of climate change through a simple theoretical framework, we monetize the implied disutility to workers of a warmer climate, a welfare cost not captured in any existing estimates.

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