Steering Adaptation: Firms, Labor Contracts, and Driver Behavior in Trucking

We study how firms and labor contracts shape workers’ adaptation to climate risk. Using real-time GPS and AI driver-monitoring data on truck drivers, we show that extreme heat impairs driving performance and that drivers adapt to it. We exploit a unique setting in which drivers work either as independent owner-operators, who pay their own operating costs, or as company employees, whose costs the firm bears. Owner-operators suffer adverse effects about twice as large as those for employees. Employees use more cabin cooling yet rest less and withdraw less labor on hot days. Firms appear to steer how much their employees adapt and on which margins. We build and quantify a model that accounts for the wedge between the firm’s and the worker’s valuation of adaptation, and for the firm’s optimal steering decision. We decompose the observed behavioral difference into cost-sharing and steering channels, and simulate how behavior changes when the externality is accounted for in drivers’ decisions.