Andrew Stevens, UCB - ARE
Abstract: How do environmental conditions and performance incentives -- both independently and jointly -- affect labor productivity? To answer this question, I use a unique panel of high-frequency employee-level production data from two California farms to estimate the causal effects of temperature and piece rate wages on the productivity of over 2,000 blueberry pickers. Previous research has found significant negative effects of extreme temperatures on worker output, raising concerns that a changing climate may have particularly harmful effects on outdoor industries. Since many agricultural workers are paid by piece rate wages, the question arises whether increasing these wages could mitigate negative direct effects of extreme temperatures. I provide evidence to answer this question. In the context of California blueberries, I find that cool temperatures (50--60 degrees Fahrenheit) and very hot temperatures (100+ degrees Fahrenheit) reduce labor productivity by nearly 17% and 12%, respectively, compared to more moderate temperatures (80--85 degrees Fahrenheit). I further find that piece rate wages are able to somewhat mitigate these effects at cool temperatures, but not at very hot temperatures. To address the endogeneity of wages to workers' productivity, I instrument for picker piece rates using the market price for California blueberries. (JEL codes: J24, J31, J43, Q12, Q54)