Extreme Heat and Exports: Evidence from Chinese Exporters

Abstract

This paper explores the impact of extremely hot days on firm-level exports at monthly frequency. We find robust evidence that firm-level exports decline gradually following a heat strike and do not recover within twenty-four months. Specifically, export losses are negligible in the first three months and accumulates to substantial amount eventually: an additional >30°C day in a given month generates cumulative losses up to 1.67% of a firm’s annual exports twenty-four months later. Negative impact of extreme heat on exports is magnified in private-owned firms and agricultural products. The substantial cumulative effect indicates that exporters may bear productivity losses under heat strikes and full adaptation is infeasible within two years. Our findings have significant implications for economic development and climate change policies.

Keywords: Extreme Heat, Export, Cumulative Effect

JEL Classification: F18, Q54