Do temperature shocks affect non-agriculture wages in Brazil? Evidence from individual-level panel data

Abstract

Abstract The relationship between temperature and agriculture outcomes in Brazil has been widely explored, overlooking the fact that most of the country s labor force is employed in non-agriculture sectors. We use monthly individual-level panel data spanning the period from January 2015 to December 2016 to ask whether temperature shocks impact non-agriculture wages in formal labor markets. Our results show that additional days in a month that fall within high-temperature ranges have significant adverse effects on real wages. Assuming a uniform climate change scenario where the daily temperature distribution shifts by 2$^{\\circ }$C, we calculate income losses for formal workers in non-agriculture markets equivalent to 0.12 per cent of 2015 GDP.