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The impact of weather on economic growth and its production factors

Author

Listed:
  • Martin Henseler

    (Thünen Institute of Rural Studies
    Partnership for Economic Policy (PEP)
    Université du Havre)

  • Ingmar Schumacher

    (IPAG Business School)

Abstract

We investigate the influence of weather on countries’ GDP and their main components of production, namely total factor productivity, capital stock, and employment. Our panel dataset includes annual observations on 103 countries for the period 1961–2010. We find that the main impacts of weather occur through temperature and drive the growth in GDP. Our results show that, for higher levels of temperature, the poor countries are much more strongly impacted than the rich countries. We also find that weather impacts per capita GDP growth through all its factors of production, with the largest impacts on total factor productivity. Again it is the poor countries for which these impacts are the strongest. The findings provide empirical evidence for negative impacts of temperature on economic growth and its factors of production and furthermore point towards climate change as an important driver of international inequality.

Suggested Citation

  • Martin Henseler & Ingmar Schumacher, 2019. "The impact of weather on economic growth and its production factors," Climatic Change, Springer, vol. 154(3), pages 417-433, June.
    • Handle: RePEc:spr:climat:v:154:y:2019:i:3:d:10.1007_s10584-019-02441-6
    DOI: 10.1007/s10584-019-02441-6
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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