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Does Hotter Temperature Increase Poverty? Global Evidence from Subnational Data Analysis

Author

Listed:
  • Hai-Anh H. Dang

    (World Bank)

  • Minh Cong Nguyen

    (World Bank)

  • Trong-Anh Trinh

    (Monash University)

Abstract
Despite a vast literature documenting climate change negative effects on various socio-economic outcomes, surprisingly hardly any evidence exists on the global impacts of hotter temperature on poverty. Analyzing a new global panel dataset of subnational poverty in 139 countries, we find higher temperature to increase poverty. Our panel fixed effects model shows that a 1°C increase leads to a 9.1 percent increase in poverty, using the US$ 1.90 daily poverty threshold. The estimated poverty increase is lower at 5.2 percent for the long-differences model, which suggests potential long-run adaptation. Regional heterogeneity exists, with Sub-Saharan African and South Asian countries being most vulnerable to higher temperature. We find suggestive evidence that reductions in crop yields could be a key channel that explains the effects of rising temperature. Further simulation indicates that global warming effects could be more pronounced in poorer regions and under scenarios of higher greenhouse gas emissions without mitigation policies.

Suggested Citation

  • Hai-Anh H. Dang & Minh Cong Nguyen & Trong-Anh Trinh, 2022. "Does Hotter Temperature Increase Poverty? Global Evidence from Subnational Data Analysis," Working Papers 622, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2022-622
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2022-622.pdf
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    References listed on IDEAS

    as
    1. Joshua Graff Zivin & Matthew Neidell, 2014. "Temperature and the Allocation of Time: Implications for Climate Change," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 1-26.
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    3. E. Somanathan & Rohini Somanathan & Anant Sudarshan & Meenu Tewari, 2021. "The Impact of Temperature on Productivity and Labor Supply: Evidence from Indian Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 129(6), pages 1797-1827.
    4. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    5. Olivier Deschênes & Michael Greenstone, 2011. "Climate Change, Mortality, and Adaptation: Evidence from Annual Fluctuations in Weather in the US," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 152-185, October.
    6. Maximilian Kotz & Leonie Wenz & Annika Stechemesser & Matthias Kalkuhl & Anders Levermann, 2021. "Day-to-day temperature variability reduces economic growth," Nature Climate Change, Nature, vol. 11(4), pages 319-325, April.
    7. Kalkuhl, Matthias & Wenz, Leonie, 2020. "The impact of climate conditions on economic production. Evidence from a global panel of regions," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    8. Marshall Burke & Solomon M. Hsiang & Edward Miguel, 2015. "Global non-linear effect of temperature on economic production," Nature, Nature, vol. 527(7577), pages 235-239, November.
    9. Damania, R. & Desbureaux, S. & Zaveri, E., 2020. "Does rainfall matter for economic growth? Evidence from global sub-national data (1990–2014)," Journal of Environmental Economics and Management, Elsevier, vol. 102(C).
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    Cited by:

    1. Shohei Nakamura & Kseniya Abanokova & Hai-Anh H. Dang & Shinya Takamatsu & Chunchen Pei & Dilou Prospere, 2023. "Is Climate Change Slowing the Urban Escalator Out of Poverty? Evidence from Chile, Colombia, and Indonesia," IJERPH, MDPI, vol. 20(6), pages 1-21, March.

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    More about this item

    Keywords

    Climate change; global warming; poverty; agriculture; subnational data;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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