Temperature Effects on Productivity and Factor Reallocation: Evidence from a Half Million Chinese Manufacturing Plants

Peng Zhang (), Olivier Deschenes, Kyle Meng and Junjie Zhang
Additional contact information
Peng Zhang: Chinese University of Hong Kong

No 11132, IZA Discussion Papers from IZA Network @ LISER

Abstract: This paper uses detailed production data from a half million Chinese manufacturing plants over 1998-2007 to estimate the effects of temperature on firm-level total factor productivity (TFP), factor inputs, and output. We detect an inverted U- shaped relationship between temperature and TFP and show that it primarily drives the temperature-output effect. Both labor- and capital- intensive firms exhibit sensitivity to high temperatures. By mid 21st century, if no additional adaptation were to occur, we project that climate change will reduce Chinese manufacturing output annually by 12%, equivalent to a loss of $39.5 billion in 2007 dollars. This implies substantial local and global economic consequences as the Chinese manufacturing sector produces 32% of national GDP and supplies 12% of global exports.

Keywords: climate change; productivity; manufacturing; China (search for similar items in EconPapers)
JEL-codes: L60 O14 O44 Q54 Q56 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2017-11
New Economics Papers: this item is included in nep-agr, nep-cna, nep-eff, nep-env, nep-res, nep-tid and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published - published in: Journal of Environmental Economics and Management, 2018, 88, 1 - 17

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https://docs.iza.org/dp11132.pdf (application/pdf)

Related works:
Journal Article: Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants (2018)
Working Paper: Temperature Effects on Productivity and Factor Reallocation: Evidence from a Half Million Chinese Manufacturing Plants (2017)
Working Paper: Temperature Effects on Productivity and Factor Reallocation: Evidence from a Half Million Chinese Manufacturing Plants (2017)
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