Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates

Melissa Dell, Benjamin Jones and Benjamin Olken

No 14680, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents novel evidence and analysis of the relationship between temperature and income. First, using sub-national data from 12 countries in the Americas, we provide new evidence that the negative cross-country relationship between temperature and income also exists within countries and even within states. Second, we provide a theoretical framework for reconciling the substantial, negative association between temperature and income in the cross-section with the even stronger short-run effects of temperature estimated by panel models. The theoretical framework suggests that half of the negative short-term effects of temperature may be offset in the long run through adaptation.

JEL-codes: O47 Q54 (search for similar items in EconPapers)
Date: 2009-01
New Economics Papers: this item is included in nep-cba
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Published as Dell, Melissa, Benjamin F. Jones, and Benjamin A. Olken. "Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates." American Economic Review 99, 2 (2009): 198-204.

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Journal Article: Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates (2009)
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