Labor market frictions and adaptation to climate change: Implications for earnings and job quality of low-skilled workers

Grant description:

Rising income inequality and declining labor market prospects are among the most salient features of the U.S. labor market today, particularly for non-college-educated men who are more likely to work in jobs which involve exposure to the elements, including in construction, agriculture, or warehousing. Growing evidence indicates that temperature stress may have important impacts on cognitive performance, labor capacity, and workplace safety, suggesting that added extreme heat due to climate change may significantly reduce earnings and job quality for many low-skilled workers.

This project asks whether climate change could exacerbate recent trends in economic inequality and, if so, the possible scope for workplace adaptation and policy reforms. This project will examine the impact of a 2006 California policy to mandate a heat-illness-prevention standard on worker injuries, employment, wages, and profitability. It will provide additional evidence on the impact of temperature on workplace safety and contribute descriptive analysis on how various demographic groups are differentially exposed to occupational extreme temperature risk.

The research uses administrative data on 11 million workplace injuries in California, injury and fatality data from the federal Office of Safety and Health Administration and the U.S. Bureau of Labor Statistics, and quasi-experimental variation in daily temperature at the U.S. ZIP code level from the National Climatic Data Center. This analysis will allow for an occupation by community zone level breakdown of workplace climate exposure by race, formal education, and immigrant status. The novel coronavirus and COVID-19, the disease caused by the virus, has placed a spotlight on the health and economic inequalities among workers in the United States and so, too, will climate change. By exploring the overall and disparate impacts on workers, this research will provide concrete evidence on policies to mitigate such impacts.