EIEE Webinar-Seminar
27 November, h 15:00 CEST
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Speaker: Hélia Costa, Economist at the Structural Policy and Research Division of the Economics Department of the OECD

This paper examines the impact of heat stress on firm-level labour productivity across 23 advanced economies from 2000 to 2021. Combining high-resolution weather data with balance sheet information, we find that both an increase in the number of high-temperature days and the occurrence of heatwaves lead to reduced labour productivity. This effect is substantial, more pronounced in smaller and less productive firms, and is exacerbated by longer heatwaves, high humidity, and low wind speeds. We find evidence of partial adaptation: firms in warmer climates and those with prior heatwave exposure suffer smaller losses from subsequent temperature extremes. However, the scope of current adaptation remains limited: higher temperatures relative to an already warm average result in more significant productivity losses, and there is no evidence of adaptation to severe extreme temperatures. These results underscore the relevance of both gradual and acute climate impacts for economic performance and underscore the need for targeted adaptation policies to mitigate the long-term growth impacts of rising temperatures.