| Abstract |
We study the impact of global warming on the decline of the labor share in the new century. Using a newly constructed dataset combining U.S. county-level labor shares with climate variables, we find that climate change accounts for about 13 percent of the decline in the labor share during 2001-2019. The adverse effect of hot days is more pronounced in sectors with higher outdoor exposure and greater automation potential, indicating that climate change augments relative labor cost vs. capital. We also present evidence that more hot days accelerated adoption of industrial robots. In the previous century, however, fewer cold days presumably offset the harm of more hot days, aligned with the established stability of labor share. |