Does air pollution inhibit manufacturing productivity in Yangtze River Delta, China? Moderating effects of temperature.

China has been experiencing serious and recurrent incidences of air pollution in recent years. The frequency and timespans of such incidences are uncertain because of variable urban weather conditions, especially temperature, that inhibit the productivity of manufacturing companies. Matching data about listed manufacturing companies in China's Yangtze River Delta urban cluster from 2003 to 2018 with data on urban air pollution and weather, we explored the effects of air pollution on corporate productivity and the moderating role of temperature. We found that air pollution significantly inhibited the productivity of these companies, which decreased by about 0.1% for 1% increase in the concentration of PM2.5. Regarding industry heterogeneity, high-energy-consumption and low-technology manufacturing industries were more sensitive to the negative effects of air pollution. Furthermore, we concluded that low temperatures played an important role in causing significant increases in the negative effects of air pollution. In the fall and winter (October to January), the lower the temperatures resulted in stronger inhibitory effects of air pollution on corporate productivity. When the average daily temperature is 0°C-3°C, the moderating effects of temperature are even more obvious. To minimize the inhibitory effects of air pollution on productivity, governments and companies should implement positive adaptions to simultaneously confront air pollution and temperature change.