How Much Will Climate Change Reduce Productivity in a High-Technology Supply Chain? Evidence from Silicon Wafer...

Area of Science:

• Environmental Science
• Economics
• Industrial Engineering

Background:

• Increasing frequency of hot days globally due to climate change.
• Potential impacts of high temperatures on human productivity and economic output.
• Need for understanding adaptation strategies in technologically advanced settings.

Purpose of the Study:

• To investigate the effect of high outdoor temperatures on productivity in a high-technology manufacturing environment.
• To quantify the impact of heat on both the quantity and quality of work.
• To assess if technological adaptations can mitigate heat's adverse effects on productivity.

Main Methods:

• Analysis of individual-level data from 35,190 worker-shifts at a silicon wafer manufacturer in China.
• Utilizing wet bulb temperature as a measure of heat stress.
• Employing econometric models to determine the relationship between temperature and productivity, controlling for indoor climate systems.

Main Results:

• A significant negative effect of increased wet bulb temperature on worker productivity was observed.
• Productivity, measured by output quantity and quality, decreased by 8.3% for every degree Celsius increase in wet bulb temperature (in the preferred linear model).
• These effects persisted despite the manufacturing facility being indoors with advanced climate control, indicating heat's pervasive impact.

Conclusions:

• High outdoor temperatures negatively impact productivity in high-technology manufacturing, even with climate control systems.
• Climate change poses a significant economic risk to industrialised nations through reduced labor productivity.
• Further research into technological and operational adaptations is crucial to mitigate these adverse effects.