Impacts of Extreme Heat on Labor Force Dynamics

Abstract

We use daily longitudinal data and a within-worker identification approach to examine the impacts of heat on labor force dynamics in Australia. High temperatures during 2001-2019 significantly reduced work attendance and hours worked, which were not compensated for in subsequent days and weeks. The largest reductions occurred in cooler regions and recent years, and were not solely concentrated amongst outdoor-based workers. Financial and Insurance Services was the most strongly affected industry, with temperatures above 38{\deg}C (100{\deg}F) increasing absenteeism by 15 percent. Adverse heat effects during the work commute and during outdoor work hours are shown to be key mechanisms.