Climate change and its regional effects on labour productivity: evidence from Portugal

Abstract

This study investigates the impacts of temperature and precipitation deviations and variability on labour productivity across Portugal's NUTS III regions using fixed-effects panel regression with annual data from 2008 to 2022. Two approaches are applied: one considers productivity at current prices and inflation as a control variable, while the other uses a constant price productivity proxy. Results indicate that precipitation variability and deviations significantly influence productivity nationally and in northern regions, while temperature variability lacks statistical significance. These findings underscore the need for improved data granularity to inform targeted climate adaptation policies that reduce dependence on precipitation.