The impact of climate change on the labor allocation: Empirical evidence from China

Abstract

Climate change may significantly affect the labor market by generating disproportionate damage to marginal returns to labor across sectors. However, this potentially important channel through which climate change may affect social welfare has not received the attention it deserves. We provide the first estimate of the long-term effects of climate change on the labor market based on the hedonic approach, which accounts for individual long-term adjustments to climate change. Using a panel of field survey data from 8076 working age residents in 279 rural communities in China, we find that a 1 °C increase from current mean temperature will reduce an average rural resident’s time allocated to farm work by 7.0%, increase the time allocated to off-farm work by 7.8%, and reduce the time allocated to leisure by 0.8%. We also find differential responses to climate change across gender: higher temperatures mainly shift males’ time from leisure to off-farm work, but mainly shift females’ time from farm work to off-farm work.