Climate change and the South African labour market

Understanding worker-level adaptation to climate shocks requires long-term, large-scale data, which is rare in developing economies. This paper addresses this gap by studying the impacts of drought in South Africa, linking granular meteorological data (1981–2023) with a unique decade-long employer-employee administrative panel covering 11 million individuals. While long-term sectoral shifts are minimal, we exploit worker-level variation in event study models to identify significant short-run disruptions. During severe droughts, affected workers are more likely to switch employers, change sectors, or relocate within the first year. While this mobility suggests that labour markets absorb some of the shock, we find evidence of severe scarring: the rate at which affected workers exit the formal labour market nearly doubles in the three years following the drought. These individuals appear to be more economically vulnerable. Our findings show that droughts displace workers, leading them to exit formal employment.