Too hot to work? Heat waves, household income, and labor adaptation in India

In a world of dynamic environmental changes, it is crucial to understand how the environment influences economic activities and performance for better policy making. However, studies on how developing countries are affected by and coping with climate change are still limited. Since India is a hot country with a large population highly vulnerable to extreme weather, this research aimed to investigate how average Indian households respond to climate change by examining the impact of rising temperatures on their economic activities and performance. We hypothesized that a rising temperature has negative relationships with Indian household income, agricultural income, household consumption, and farm labor inputs. Using temperature data and household data from 2012, we conducted both correlation analysis and regression analysis. Our results indicated significant negative relationships between heat waves and household income and consumption. In addition, the strongest negative correlation was between heat waves and agricultural income, suggesting that the agricultural sector was one of the production sectors most impacted by heat waves. Moreover, the correlation between heat waves and annual agricultural labor inputs was U-shaped, indicating potential adaptation when hot days occur more frequently. Robustness checks using different definitions of heat waves and transforming our data for better linearity gave similar results. This research suggested that to improve agricultural income during heat waves, policies should focus on enhancing agricultural productivity, rather than labor inputs.