Temperature and industrial output: Firm-level evidence from China |
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| Affiliation: | 1. Department of Real Estate, National University of Singapore, Singapore;2. Hang Lung Center for Real Estate and Department of Construction Management, Tsinghua University, China;3. School of Social Sciences, Nanyang Technological University, Singapore;1. Department of Economics, University of Ottawa, Canada;2. Department of Economics, University of Sussex, UK;3. School of Economics, Nanjing University, China;1. Department of Applied Economics, Shanghai Jiao Tong University, China;2. Department of Economics, University of California, Berkeley, United States;1. CINCH, University of Duisburg-Essen, Germany;2. Lund University, Sweden;3. Cornell University, Department of Policy Analysis and Management (PAM), 106 Martha Van Rensselaer Hall, Ithaca, NY 14850, USA;1. School of Economics, Nankai University, China;2. Center for Transnationals’ Studies, School of Economics, Nankai University, China;3. School of Advanced Agricultural Sciences, Peking University, China;4. Jiangxi Agricultural University, China;5. Crawford School of Public Policy, Australian National University, Australia |
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| Abstract: | We pair a firm-level panel of annual industrial output with a fine-scale daily weather data set, to estimate the responses of industrial output to temperature changes in China. We have four primary findings. First, industrial output is nonlinear in temperature changes. With seasonal average temperatures as temperature variables, output responds positively to higher spring temperatures and negatively to elevated summer temperatures. With temperature bins as temperature variables, output increases linearly with temperature up to 21–24 °C, and then declines sharply at higher temperatures. Second, lagged temperature changes exert large and significant impacts on current year’s output. Third, higher summer temperatures have larger detrimental effects on output in low-temperature regions than in high-temperature regions, which suggests that adaptation to warming may have been actively undertaken in high-temperature regions in China. Lastly, industrial output in China is projected to decrease by 3–36% by 2080 under the slowest warming scenario (B1) and by 12–46% under the most rapid warming scenario (A2) under the global climate models UKMO-HadCM3 and PCM. |
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| Keywords: | Temperature Industrial output Adaptation China |
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