Effects of climate change on combined labour productivity and supply: an empirical, multi-model study

Although effects on labour is one of the most tangible and attributable climate impact, our quantification of these effects is insufficient and based on weak methodologies. Partly, this gap is due to the inability to resolve different impact channels, such as changes in time allocation (labour supply) and slowdown of work (labour productivity). Explicitly resolving those in a multi-model inter-comparison framework can help to improve estimates of the effects of climate change on labour effectiveness. In this empirical, multi-model study, we used a large collection of micro-survey data aggregated to subnational regions across the world to estimate new, robust global and regional temperature and wet-bulb globe temperature exposure-response functions (ERFs) for labour supply. We then assessed the uncertainty in existing labour productivity response functions and derived an augmented mean function. Finally, we combined these two dimensions of labour into a single compound metric (effective labour effects). This combined measure allowed us to estimate the effect of future climate change on both the number of hours worked and on the productivity of workers during their working hours under 1·5°C, 2·0°C, and 3·0°C of global warming. We separately analysed low-exposure (indoors or outdoors in the shade) and high-exposure (outdoor in the sun) sectors. We found differentiated empirical regional and sectoral ERF's for labour supply. Current climate conditions already negatively affect labour effectiveness, particularly in tropical countries. Future climate change will reduce global total labour in the low-exposure sectors by 18 percentage points (range −48·8 to 5·3) under a scenario of 3·0°C warming (24·8 percentage points in the high-exposure sectors). The reductions will be 25·9 percentage points (–48·8 to 2·7) in Africa, 18·6 percentage points (–33·6 to 5·3) in Asia, and 10·4 percentage points (–35·0 to 2·6) in the Americas in the low-exposure sectors. These regional effects are projected to be substantially higher for labour outdoors in full sunlight compared with indoors (or outdoors in the shade) with the average reductions in total labour projected to be 32·8 percentage points (–66·3 to 1·6) in Africa, 25·0 percentage points (–66·3 to 7·0) in Asia, and 16·7 percentage points (–45·5 to 4·4) in the Americas. Both labour supply and productivity are projected to decrease under future climate change in most parts of the world, and particularly in tropical regions. Parts of sub-Saharan Africa, south Asia, and southeast Asia are at highest risk under future warming scenarios. The heterogeneous regional response functions suggest that it is necessary to move away from one-size-fits-all response functions to investigate the climate effect on labour. Our findings imply income and distributional consequences in terms of increased inequality and poverty, especially in low-income countries, where the labour effects are projected to be high.