Reproducibility package for Rising Heat In The Labor Market: The Impact Of Climate Change On Jobs In Europe

This paper studies the impact of rising heat on labor markets across Europe by combining geocoded district-level, establishment-level and wet-bulb temperature (WBT) data. At the district level, we construct a panel covering 1,525 NUTS-3 districts across 32 countries from 1980–2023, disaggregated by ten economic sectors to estimate dynamic labor market responses to WBT increases. We complement the analysis using representative, geocoded surveys covering over 46,000 establishments. We find that a one standard deviation increase in yearly WBT (0.7°C) reduces employment growth by 0.3 percent two years later. In a long-term perspective, our results indicate that the increase in WBT temperature since 1980 may have reduced employment in Europe by around 1.1 million jobs, equivalent to more than half of a normal year of employment growth. The effect is stronger in heat-exposed, low-wage, and labor-intensive sectors, as well as in small and young establishments. It also leads to persistent declines in hours worked and gross value-added levels. In contrast to the negative employment impact, real average wage growth rises after temperature increases because low-skill workers and low-wage establishments bear the brunt of the employment impact within sectors. As a result, the composition of employment shifts towards higher-paid jobs. The impact of rising WBT is in part explained by limited adaptation: fewer than one-third of small and about half of large establishments in Europe invest in cooling technology, with establishments paying lower wages and facing less favorable local business environments being less likely to adapt