How Much Will Climate Change Reduce Productivity in a High-Technology Supply Chain? Evidence from Silicon Wafer Manufacturing

Jingnan Chen, Miguel Fonseca, Anthony Heyes, Jie Yang and Xiaohui Zhang
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Jingnan Chen: University of Exeter
Jie Yang: Guilin University of Electronic Technology
Xiaohui Zhang: University of Exeter

Environmental & Resource Economics, 2023, vol. 86, issue 3, No 8, 533-563

Abstract: Abstract The frequency of hot days in much of the world is increasing. What is the impact of high temperatures on productivity? Can technology-based adaptation mitigate such effects of climate change? We provide some answers to these questions by examining how high outdoor temperatures affect a high-technology, precision manufacturing setting. Exploiting individual-level data on the quantity and quality of work done across 35,190 worker-shifts in a leading NYSE-listed silicon wafer maker in China, we evidence a negative effect of outdoor heat on productivity. The effects are large: in our preferred linear specification, an increase in wet bulb temperature of $$10\,^{\circ }$$ 10 ∘ C causes a reduction in output of 8.3%. Temperature effects exist even though the manufacturer’s work-spaces are indoors and protected by high-quality climate control systems. Results are not driven by extreme weather events and are robust to alternative modelling approaches. They illustrate the potential future adverse economic effects of climate change in most of the industrialised world.

Keywords: Climate impacts; Adaptation; Productivity (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10640-023-00803-4

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