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Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants

Publication ,  Journal Article
Zhang, P; Deschenes, O; Meng, K; Zhang, J
Published in: Journal of Environmental Economics and Management
March 1, 2018

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.

Duke Scholars

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Published In

Journal of Environmental Economics and Management

DOI

EISSN

1096-0449

ISSN

0095-0696

Publication Date

March 1, 2018

Volume

88

Start / End Page

1 / 17

Related Subject Headings

  • Agricultural Economics & Policy
  • 3801 Applied economics
  • 1402 Applied Economics
  • 1401 Economic Theory
  • 0502 Environmental Science and Management
 

Citation

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Zhang, P., Deschenes, O., Meng, K., & Zhang, J. (2018). Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants. Journal of Environmental Economics and Management, 88, 1–17. https://doi.org/10.1016/j.jeem.2017.11.001
Zhang, P., O. Deschenes, K. Meng, and J. Zhang. “Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants.” Journal of Environmental Economics and Management 88 (March 1, 2018): 1–17. https://doi.org/10.1016/j.jeem.2017.11.001.
Zhang P, Deschenes O, Meng K, Zhang J. Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants. Journal of Environmental Economics and Management. 2018 Mar 1;88:1–17.
Zhang, P., et al. “Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants.” Journal of Environmental Economics and Management, vol. 88, Mar. 2018, pp. 1–17. Scopus, doi:10.1016/j.jeem.2017.11.001.
Zhang P, Deschenes O, Meng K, Zhang J. Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants. Journal of Environmental Economics and Management. 2018 Mar 1;88:1–17.
Journal cover image

Published In

Journal of Environmental Economics and Management

DOI

EISSN

1096-0449

ISSN

0095-0696

Publication Date

March 1, 2018

Volume

88

Start / End Page

1 / 17

Related Subject Headings

  • Agricultural Economics & Policy
  • 3801 Applied economics
  • 1402 Applied Economics
  • 1401 Economic Theory
  • 0502 Environmental Science and Management