Climate Change, Firms, and the Aggregate Productivity
This paper presents a general equilibrium structural framework that separates the effects of temperature on firm-level demand, productivity, and input misallocation to examine the aggre- gate productivity losses caused by climate change. By analyzing data from Italian firms, that cover approximately 75% of aggregate gross output, and incorporating detailed climate data, the paper reveals an inverted U-shaped relationship between temperature and firm-level outcomes such as productivity and capital misallocation. Leveraging these micro elasticities, the paper projects the aggregate productivity losses resulting from climate change scenarios. The findings indicate a significant and nonlinear relationship between climate change and aggregate productivity, with a projected 2-degree Celsius increase leading to a 1.8% decline. Doubling the expected increase to 4 degrees exacerbates the decline nearly fourfold to approximately 6.4%. Finally, the analysis highlights widening regional disparities as a consequence of climate change.
Date: 9 October 2023, 16:05 (Monday, 1st week, Michaelmas 2023)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Skills Lab or https://zoom.us/j/92415955348?pwd=ME5ybjVBVk90aThHdkcwVnZiUWF4Zz09
Speaker: Andrea Chiavari (University of Oxford)
Organising department: Department of Economics
Part of: Environment and Resource Economics Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Emma Heritage