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Manufacturing Output and Extreme Temperature: Evidence from Canada

Author

Listed:
  • Philippe Kabore

    (Department of Economics, University of Ottawa)

  • Nicholas Rivers

    (Graduate School of Public and International Affairs and Institute of the Environment, University of Ottawa)

Abstract
This paper analyzes the effects of extreme temperature on manufacturing output using a dataset covering the universe of manufacturing establishments in Canada from 2004 to 2012. Extreme temperature can affect manufacturing activity by affecting separately or jointly labour productivity and labour inputs. Using a panel fixed effects method, our results suggest a non-linear relationship between outdoor extreme temperature and manufacturing output. Each day where outdoor mean temperatures are below -18°C or above 24°C reduces annual manufacturing output by 0.18% and 0.11%, respectively, relative to a day with a mean temperature between 12 to 18°C. In a typical year, extreme temperatures, as measured by the number of days below -18°C or above 24°C, reduce annual manufacturing output by 2.2%, with extremely hot temperatures contributing the most to this impact. Given the predicted change in climate for the mid and end of the century, we predict annual manufacturing output losses to range between 2.8 to 3.7% in mid-century and 3.7 to 7.2% in the end of the century.

Suggested Citation

  • Philippe Kabore & Nicholas Rivers, 2020. "Manufacturing Output and Extreme Temperature: Evidence from Canada," Working Papers 2006E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:2006e
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    File URL: https://ruor.uottawa.ca/bitstream/10393/41184/1/2006E.pdf
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    Cited by:

    1. Jakob Lehr & Katrin Rehdanz, 2023. "The Effect of Temperature on Energy Use, CO2 Emissions, and Economic Performance in German Industry," CRC TR 224 Discussion Paper Series crctr224_2023_489, University of Bonn and University of Mannheim, Germany.
    2. Mario Lackner & Hendrik Sonnabend, 2024. "When performance melts away: Heat causes mental errors in high-stakes competitions," Economics working papers 2024-11, Department of Economics, Johannes Kepler University Linz, Austria.
    3. Lehr, Jakob & Rehdanz, Katrin, 2021. "The Effect of Temperature on Energy Use and CO2 Emissions in the German Industry," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242373, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    Climate change; Temperature; Manufacturing; Canada; Employment.;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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