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

Hai-Anh Dang (), Stephane Hallegatte, Minh Cong Nguyen () and Trong-Anh Trinh ()
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Minh Cong Nguyen: World Bank
Trong-Anh Trinh: Centre for Health Economics, Monash Business School, Monash University

No 2025-08, Working Papers from Centre for Health Economics, Monash University

Abstract: Despite a vast body of literature documenting the harmful effects of climate change on various socio-economic outcomes, little cross-country analysis exists on the global impacts of higher temperatures on poverty and inequality. Analyzing a new global panel dataset of subnational poverty in 137 countries covering the past decade, we find that a one-degree Celsius increase in temperature leads to a 17.1% increase in poverty, employing the US$2.15 daily poverty threshold, and a 1.1% increase in the Gini inequality index. We also find negative effects of colder temperature on poverty and inequality. Yet, while poorer countries—particularly those in Sub-Saharan Africa—are more affected by climate change, household adaptation could have mitigated some adverse effects in the long run. The findings provide relevant and timely inputs for the global fight against climate change as well as the current policy debate on cost-sharing between richer and poorer countries.

Keywords: Climate change; temperature; poverty; inequality; subnational data (search for similar items in EconPapers)
JEL-codes: I32 O1 Q54 (search for similar items in EconPapers)
Date: 2025-02
New Economics Papers: this item is included in nep-agr, nep-dev and nep-mac
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Related works:
Working Paper: Does hotter temperature increase poverty and inequality? Global evidence from subnational data analysis (2023)
Working Paper: Does Hotter Temperature Increase Poverty and Inequality ? Global Evidence from Subnational Data Analysis (2023)
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