Climate Change and Labor Reallocation: Evidence from Six Decades of the Indian Census

78 Pages Posted: 18 Aug 2021 Last revised: 6 Dec 2021

See all articles by Maggie Y. Liu

Maggie Y. Liu

U.S. Department of the Treasury, Office of Tax Analysis (OTA)

Yogita Shamdasani

National University of Singapore (NUS), Department of Economics

Vis Taraz

Smith College

Date Written: December 1, 2021

Abstract

How do rising temperatures affect long-term labor reallocation in developing economies? In this paper, we examine how increases in temperature impact structural transformation and urbanization within Indian districts between 1951 and 2011. We find that rising temperatures are associated with lower shares of workers in non-agriculture, with effects intensifying over a longer time frame. Supporting evidence suggests that local demand effects play an important role: declining agricultural productivity under higher temperatures reduces the demand for non-agricultural goods and services, which subsequently lowers non-agricultural labor demand. Our results illustrate that rising temperatures limit sectoral and rural-urban mobility for isolated households.

Keywords: climate change, structural transformation, labor reallocation, urbanization, migration

JEL Classification: O12, O13, Q54, R23

Suggested Citation

Liu, Maggie Y. and Shamdasani, Yogita and Taraz, Vis, Climate Change and Labor Reallocation: Evidence from Six Decades of the Indian Census (December 1, 2021). Available at SSRN: https://ssrn.com/abstract=3905985 or http://dx.doi.org/10.2139/ssrn.3905985

Maggie Y. Liu

U.S. Department of the Treasury, Office of Tax Analysis (OTA) ( email )

1500 Pennsylvania Ave. NW
Washington, DC 20220
United States

Yogita Shamdasani

National University of Singapore (NUS), Department of Economics ( email )

Singapore
Singapore

Vis Taraz (Contact Author)

Smith College ( email )

Northampton, MA 01063
United States

HOME PAGE: http://www.smith.edu/academics/faculty/vis-taraz

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