The Aggregate Productivity Consequences of Climate Change in the Middle East and North Africa Region

Abstract

This paper investigates the impact of climate change on the labor productivity of the manufacturing sector in six countries in the Middle East and North Africa region (Egypt, Jordan, Oman, Morocco, and Qatar). By analyzing the effect of temperature on labor productivity, this paper sheds light on the consequences of climate change on sectoral reallocation, welfare, and trade. The findings reveal that the deviation in temperature leads to a decrease in labor productivity and a subsequent negative effect on production. Furthermore, the research presents evidence of the adverse impact of climate change on sectoral reallocation and proposes policies that can mitigate the costs associated with climate change.