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

Hai-Anh Dang () and Trong-Anh Trinh ()
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Trong-Anh Trinh: University of Melbourne

No 15326, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Despite a vast literature documenting the negative effects of climate change on various socio-economic outcomes, little, if any, evidence exists on the global impacts of hotter temperature on poverty. Analyzing a new global dataset of subnational poverty in 166 countries, we find higher temperature to increase poverty. This finding is robust to various model specifications, data samples, and measures of temperature. Our preferred specification shows that a 1˚C increase leads to a 2.1 percent increase in the headcount poverty rate, using the US$ 1.90 daily poverty threshold. Regional heterogeneity exists, with Sub-Saharan African countries being most vulnerable to higher temperature. We find suggestive evidence that reduction in crop yields could be a key channel that explains the effects of rising temperature. Further simulation indicate that global warming can significantly increase poverty, with more pronounced effects occurring in poorer regions and under scenarios of higher greenhouse gas emissions without mitigation policies.

Keywords: climate change; global warming; poverty; agriculture (search for similar items in EconPapers)
JEL-codes: I32 O1 Q54 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2022-05
New Economics Papers: this item is included in nep-agr, nep-dev, nep-ene and nep-env
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