How Changing in Climate Patterns Impact Labor Productivity: Perspectives from Developing Economies in South Asia.

Abstract

This paper examines the impact of climate change on labour productivity in selected South Asian nations, highlighting the urgent need for adaptive strategies. Climate change poses significant threats to human welfare, particularly through extreme weather events and rising temperatures, which have been linked to decreased worker productivity. Using annual data from 1990 to 2023, this study explores the relationship between labour productivity and variables such as foreign direct investment, renewable energy consumption, urbanization, trade openness, and climate change. Employing an ARDL model, the study reveals that heat exposure leads to health issues such as dehydration and cognitive decline, significantly affecting sectors like agriculture, manufacturing, and construction. The findings indicate that labour productivity could decline by 10-15% by the end of the century in South Asia due to climate-related factors, with substantial economic implications, including potential GDP losses of up to 8.8% annually. This research underscores the necessity for targeted policies to mitigate these impacts and promote sustainable development.