Climate Change and Labour Productivity: Evidence from South Korea’s Manufacturing Industry

This study examines the impact of climate change on labour productivity in South Korea’s manufacturing sector using annual panel data for 40 industries from 2000 to 2022. The analysis estimates the marginal effect of industry-level average annual temperatures on labour productivity based on a Cobb–Douglas production framework, considering linear, nonlinear, and heterogeneous temperature effects. The results show that temperature has a positive effect on productivity at lower levels but becomes negative beyond a threshold of 13–14°C, although the precise location of the threshold is sensitive to sample composition. This threshold effect is not observed in high-technology industries, indicating conventional manufacturing industries are more vulnerable to rising temperatures than advanced manufacturing sectors.