Heat Stress and Labor Market Inequality

Using administrative public health insurance records for the German working-age population, we link the quasi-experimental occurrence of heat waves by postal code to increases in sick leave and assess the implications for labor market inequality. On an average hot day, the number of sick leave cases increases by about 6% over the course of a week. With enduring heat exposure over five consecutive days, the effect grows by more than half. Heat-induced sick leaves distribute highly unevenly. Those who are already disadvantaged in terms of their income and working conditions are more vulnerable to heat stress. Workers who are more flexible in scheduling and adjusting their working hours are less at risk. Exploiting individual-level job trajectories and health conditions over time, we document that heat waves induce long-term switches to less heat-exposed occupations and long-term increases in the demand for all healthcare services, i.e. doctor visits, hospitalizations, and prescriptions.