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

14 Pages Posted: 31 Jan 2009 Last revised: 13 Aug 2010

See all articles by Melissa Dell

Melissa Dell

Massachusetts Institute of Technology (MIT) - Department of Economics

Benjamin F. Jones

Northwestern University; National Bureau of Economic Research (NBER)

Benjamin A. Olken

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Society of Fellows

Date Written: January 2009

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.

Suggested Citation

Dell, Melissa and Jones, Benjamin F. and Olken, Benjamin A., Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates (January 2009). NBER Working Paper No. w14680. Available at SSRN: https://ssrn.com/abstract=1335705

Melissa Dell

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States

Benjamin F. Jones (Contact Author)

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-3177 (Phone)
847-467-1777 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Benjamin A. Olken

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States
617-253-6833 (Phone)
617-253-1330 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-588-1407 (Phone)

Harvard University - Society of Fellows

Cambridge, MA 02138
United States

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