Steering Adaptation: Firm, Labor Contracts, and Driver Responses to Heat in the Trucking Industry

We study how firms shape workers’ adaptation to climate risk. Using real-time GPS and driver-monitoring data on 10,000 truck drivers over 15 months, we show that exposure to extreme heat worsens driver performance and induces adaptive responses. Firms play a central role in shaping both adaptation choices and their consequences. Relative to employee drivers, owner-operators are less likely to use air conditioning and instead adapt by taking more rest and adjusting their labor supply. Firms also mitigate negative productivity shocks by dispatching additional trucks on hot days. As a result, the adverse effects of heat are about twice as large for owner-operators as for employee drivers. To rationalize the observed heterogeneous adaptation, we develop and quantify a model in which firms share adaptation costs and steer workers’ behavior, trading off the benefits of adaptation against moral hazard.