Temperature Effects on Productivity and Factor Reallocation: Evidence from a Half Million Chinese Manufacturing Plants / Peng Zhang, Olivier Deschenes, Kyle C. Meng, Junjie Zhang.

Format:

Book

Author/Creator:

Zhang, Peng.

Contributor:

National Bureau of Economic Research.

Deschenes, Olivier.

Meng, Kyle C.

Zhang, Junjie.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23991.

NBER working paper series no. w23991

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Temperature Effects on Productivity and Factor Reallocation

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

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.

Notes:

Print version record

November 2017.