Abstract:
"Does temperature affect economic performance directly? This paper attempts to bridge micro-level studies of thermal stress and task performance with macroeconomic studies of long-run growth, by presenting a microeconomic model of labor supply under thermal stress and using panel data to identify temperature-driven productivity impacts at the international and sub-national level. We find that the effect of a hotter year on income and implied TFP varies with a region’s position relative to the optimal temperature, so that a positive temperature shock leads to a drop in productivity in hot regions and a rise in cold ones."
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Host: Bård Harstad