The world is different because of you: Global warming, technological progress and economic development

Abstract

Prior research often overlooks microlevel temperature impacts on labor productivity or oversimplifies climate‒economy relations. In contrast, this study innovatively incorporates physiological assumptions into a labor economics model. Using geospatial data integration and panel regression on multinational data, this study explores the inverted U-shaped link between temperature and a country's economic development. The findings revealed that a rise in temperature can suppress economic activity in countries with high temperatures and promote economic activity to a certain extent in the few countries with low temperatures. The mechanism analysis revealed that changes in agricultural development, industrial development and employment are important channels through which temperature affects growth. When technological progress is factored in expansion analysis, the inflection point of the inverted U-shaped curve shifts right. This study provides a scientific basis and empirical evidence for dynamic regulations to address global warming and support economic growth.