Goldilocks Economies? Temperature Stress and the Direct Impacts of Climate Change
We review recent literature on the effect of temperature stress on economic activity, operating through basic human physiology. There is growing evidence from both micro and macro studies of causal impacts of extreme temperature on health, labor supply, and labor productivity, driven in large part by extreme heat stress. There is also a suggestion of an optimal temperature zone for economic activity, though empirical research on potential adaptive responses remains thin. This emerging literature has implications for the consequence of climate change, and may also provide a partial explanation of why hot countries are generally poorer than temperate or cold ones.
Part of this research was funded by the National Science Foundation (NSF) Graduate Research Fellowship Program (GRFP). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.