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

Using detailed data from garment factories in Bangalore, India, we 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 temperatureproductivity gradient by 75 percent. Our estimates suggest that productivity returns to LEDs are more than four times larger than the energy savings, significantly shifting firms’ costbenefit calculations in favor of adoption. We find no evidence of contemporaneous impacts of temperature on worker attendance, indicating labor supply is not a primary mechanism of impact between temperature and productivity.