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

64 Pages Posted: 31 May 2022

See all articles by Hai-Anh Dang

Hai-Anh Dang

World Bank - Development Data Group (DECDG); IZA Institute of Labor Economics; Indiana University Bloomington - School of Public & Environmental Affairs (SPEA); Global Labor Organization (GLO); Vietnam National University Ha Noi

Trong-Anh Trinh

World Bank

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

JEL Classification: Q54, I32, O1

Suggested Citation

Dang, Hai-Anh H. and Trinh, Trong-Anh, Does Hotter Temperature Increase Poverty? Global Evidence from Subnational Data Analysis. IZA Discussion Paper No. 15326, Available at SSRN: https://ssrn.com/abstract=4123766 or http://dx.doi.org/10.2139/ssrn.4123766

Hai-Anh H. Dang (Contact Author)

World Bank - Development Data Group (DECDG) ( email )

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Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

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Global Labor Organization (GLO) ( email )

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Vietnam National University Ha Noi ( email )

Trong-Anh Trinh

World Bank

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