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Do temperature shocks affect non-agriculture wages in Brazil? Evidence from individual-level panel data

Published online by Cambridge University Press:  05 April 2021

Jaqueline Oliveira ,
Bruno Palialol Open the ORCID record for Bruno Palialol [Opens in a new window]  and
Paula Pereda Open the ORCID record for Paula Pereda [Opens in a new window]
Jaqueline Oliveira*
Affiliation:
Rhodes College, Memphis, TN, USA
Bruno Palialol
Affiliation:
University of São Paulo, São Paulo, Brazil
Paula Pereda
Affiliation:
University of São Paulo, São Paulo, Brazil
*
*Corresponding author. [email protected]
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Abstract

The relationship between temperature and agriculture outcomes in Brazil has been widely explored, overlooking the fact that most of the country's labor force is employed in non-agriculture sectors. We use monthly individual-level panel data spanning the period from January 2015 to December 2016 to ask whether temperature shocks impact non-agriculture wages in formal labor markets. Our results show that additional days in a month that fall within high-temperature ranges have significant adverse effects on real wages. Assuming a uniform climate change scenario where the daily temperature distribution shifts by 2$^{\circ }$C, we calculate income losses for formal workers in non-agriculture markets equivalent to 0.12 per cent of 2015 GDP.

Keywords

climate changetemperature shocksformal labor marketslabor productivitynon-agriculture sectorwages

JEL classification

Q54: Climate • Natural Disasters and Their Management • Global Warming C23: Panel Data Models • Spatio-temporal Models J24: Human Capital • Skills • Occupational Choice • Labor Productivity
Type
Research Article
Information
Environment and Development Economics , Volume 26 , Special Issue 5-6: Weather and Climate Impacts in Developing Countries , October 2021 , pp. 450 - 465
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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