Title page 1

Contents 1

Abstract 2

I. Introduction 4

II. Literature review 7

III. Data 10

IV. Methodology 12

V. Results 17

5.1. The impact of rising heat on employment 17

5.2. The impact of rising heat on hours worked, output, and wages 20

5.3. The disproportionate impact of rising heat on low-wage jobs within sectors 21

5.4. The impact of rising heat on structural change 24

5.5. Adaptation 25

VI. Conclusion 27

References 29

Appendix 40

Table 1. Effect of WBT on establishments' employment 32

Table 2. Effect of WBT on establishments' revenues, average wage and energy costs 32

Table 3. Effect of WBT on jobs' reallocation within sectors 33

Figure 1. Evolution of wet-bulb temperature (yearly average across the sample of districts) 34

Figure 2. Maps of wet-bulb temperature 34

Figure 3. Impact of wet-bulb temperature changes on district-sector employment 35

Figure 4. Impact of wet-bulb temperature on district-sector employment, across climate zones (WBT terciles, from low to high) 36

Figure 5. Impact of wet-bulb temperature on district-sector employment, across high-, mid- and low-income districts 36

Figure 6. Impact of wet-bulb temperature on district-sector employment: heat-sensitive sectors vs non-heat-sensitive sectors 37

Figure 7. Impact of wet-bulb temperature on district-sector employment: sectors with high capital-intensity vs sectors with low-capital intensity 37

Figure 8. Impact of wet-bulb temperature on districts' gross value added (GVA) 38

Figure 9. Impact of wet-bulb temperature on district-sector hours worked 38

Figure 10. Impact of wet-bulb temperature on average wage 39

Figure 11. Dynamic Effects of Temperature Shocks on the Share of Employment in High-Wage Sectors 39

Table A.1. List of countries in ARDECO, and years available in WBES 40

Table A.2. Sectors of economic activity 41

Table A.3. Descriptive statistics 42

Table A.4. Less than half of small or medium size establishments in EMDEs invest in common resilience technologies and practices 43

Table A.5. Effect of establishments' wage on climate adaptation technologies 44

Table A.6. Relation between local business environment constraints and establishments' employment response to rising heat 45

Figure A.1. Impact of wet-bulb temperature on employment: robustness checks 46

Figure A.2. Average real wage by sector 47

Figure A.3. District-level employment effects of WBT, one sector at time 48