Does temperature affect labor productivity: Crosscountry evidence

Abstract

This analysis, by using a cross-section data of 111 countries for different samples of 1997-2006 period and Ordinary Least Square (OLS) estimation technique, tests the hypothesis that higher temperature conversely affects labor productivity in a country. The results indicate that there is statistically significant negative relationship between temperature and labor productivity level of a country and this finding remains valid for all samples. Also we identified that temperature level of a country is the second most contributing factor to the explanation of labor productivity level in that particular country. The most contributing factor to labor productivity level is being a high income country.