Working Paper: NBER ID: w21119
Authors: Geoffrey Heal; Jisung Park
Abstract: We review recent literature on the effect of temperature stress on economic activity, operating through basic human physiology. There is growing evidence from both micro and macro studies of causal impacts of extreme temperature on health, labor supply, and labor productivity, driven in large part by extreme heat stress. There is also a suggestion of an optimal temperature zone for economic activity, though empirical research on potential adaptive responses remains thin. This emerging literature has implications for the consequence of climate change, and may also provide a partial explanation of why hot countries are generally poorer than temperate or cold ones.
Keywords: climate; heat stress; productivity; climate change; temperature
JEL Codes: Q54; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Extreme temperature stress (Q54) | Increased mortality rates (I12) |
| Extreme heat (Q54) | Negative impact on labor productivity (F66) |
| Hotter years (Q54) | Lower economic growth (F69) |
| Extreme temperature stress (Q54) | Negative impact on economic activity (F69) |