Distributional effects of the increasing heat incidence on labor productivity

This paper examines how temperature affects worker productivity beyond the usual "on average"analysis, with a particular focus on distributional impacts of the increasing heat incidence across high- and low -productivity areas. Using a recentered influence function regression approach, we estimate unconditional reduced -form effects of a location shift in the temperature distribution-consistent with climate change trends-on the labor productivity distribution across counties in the contiguous U.S. We find that labor productivity is largely insensitive to changes in the frequency of cool -to -moderate maximum daily temperatures. However, as temperatures shift above 24 degrees C, the effects on productivity turn increasingly negative, albeit with their magnitudes attenuating as a county's productivity rank rises. While highly productive locations in the top 5% are not adversely impacted even by the hottest temperatures, permanently increasing the incidence of >= 36 degrees C temperatures just by a day lowers productivity at the bottom vigintile by a nontrivial 0.22% per year, an equivalent of 10.5 hours of work by a minimum -wage worker. As temperatures continue to rise, not only does worker productivity worsen on average, but the cross -county dispersion therein widens too. Given existing climate forecasts, we predict that future extreme temperatures would further deepen worker productivity inequality.