Working Paper: NBER ID: w14680
Authors: Melissa Dell; Benjamin F. Jones; Benjamin A. Olken
Abstract: This paper presents novel evidence and analysis of the relationship between temperature and income. First, using sub-national data from 12 countries in the Americas, we provide new evidence that the negative cross-country relationship between temperature and income also exists within countries and even within states. Second, we provide a theoretical framework for reconciling the substantial, negative association between temperature and income in the cross-section with the even stronger short-run effects of temperature estimated by panel models. The theoretical framework suggests that half of the negative short-term effects of temperature may be offset in the long run through adaptation.
Keywords: temperature; income; adaptation; cross-sectional; panel data
JEL Codes: O47; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Temperature (C29) | Income (D31) |
| Temperature (C29) | Economic Growth (O49) |
| Adaptation Mechanisms (O33) | Temperature Effects on Income (H31) |
| Temperature (C29) | Municipal Per Capita Income (H79) |