The Light and the Heat: Productivity Co-benefits of Energy-saving Technology

Using detailed data from garment factories in Bangalore, India, Adhvaryu, Kala and Nyshadham (2014) estimate large, negative impacts of temperature on productive efficiency (actual over target output). The introduction of LED lighting, which emits less heat than standard lighting, attenuates the temperature-productivity gradient by 75 percent. Their estimates suggest that productivity returns to LEDs are more than four times larger than the energy savings, significantly shifting firms’ cost-benefit calculations in favour of adoption. They find no evidence of contemporaneous impacts of temperature on worker attendance, indicating that labour supply is not a primary mechanism of impact between temperature and productivity.