Conference Agenda

Climate change is intensifying weather extremes worldwide, yet our understanding of how these shocks affect firm-level productivity remains limited. This paper provides the first comprehensive assessment of how diverse weather dimensions impact economic productivity using granular firm data across 38 countries. We match over 12 million firm-year observations with high-resolution weather data, examining the economic implications of a broad range of weather statistics, including temperature variability, precipitation patterns, heatwaves and cold spells. We find that, beyond the well-studied effects of mean temperatures, day-to-day temperature variability emerge as the most economically significant weather determinant: a one-standard-deviation increase reduces firm productivity by approximately 1%, consistent with macro-level evidence. Heatwave severity reduces productivity by 0.24% for a one-standard-deviation increase, confirming previous findings with expanded geographic scope. Decomposing weather into transitory shocks and long-run climate, we find evidence of partial adaptation to temperature variability and precipitation, that is, firms in regions with historically high exposure experience attenuated losses, but no adaptation to extreme heat: even firms in historically hot locations remain equally vulnerable to heatwave shocks. These results provide crucial microeconomic foundations for climate damage functions and suggest that focusing exclusively on mean temperature changes underestimates the economic costs of climate change, particularly as autonomous adaptation appears unable to offset damages from increasingly frequent heat extremes.