Poverty Traps and Climate Change
AbstractWe use a demo-economic model to examine the question of whether climate change could widen or deepen poverty traps. The model includes two crucial mechanisms. Parents are risk averse when deciding how many children to have; fertility is high when infant survival is low. High fertility spreads scarce household resources thin, resulting in children being poorly educated. At the macro level, technological progress is slow because of decreasing returns to scale in agriculture. With high population growth and slow technological progress, the economy stagnates. If, on the other hand, infant survival is high, then fertility is low, education is high, and the economy grows exponentially. Diarrhea and malaria are among the leading causes of infant mortality; both are sensitive to weather and climate. There may thus be a climate-related poverty trap where climate change increases disease burdens that reinforce poverty. We estimate finite-mixture models of per capita income, fertility, and mortality at the national scale. As predicted by the model, the observations are bi-modal. Temperature has statistically significant effects: hotter countries are more likely to be classified as poor; hotter countries are more likely to be classified as high mortality; and the number of children per woman in high fertility societies increases with temperature. We then use the model to simulate a number of different futures, focusing on the question whether climate change may widen and deepen the health/fertility poverty trap. The results suggest that this is unlikely for reasonable parameter choices. Climate change may have a substantial effect on specific causes of infant mortality, but the effect on total infant mortality is more muted. More importantly, the model is driven by infant survival, and climate change has a much smaller proportional effect on survival than on mortality. Furthermore, climate change will be relatively small over the next few decades. In the medium term, the impact of climate change is therefore dwarfed by other factors (health and education in this model). In the long term, climate change is more important, but the long term is primarily shaped by the medium term.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP413.
Date of creation: Nov 2011
Date of revision:
children/Climate change/education/fertility/growth/infant mortality/population/poverty/poverty traps/risk;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-21 (All new papers)
- NEP-ENE-2011-11-21 (Energy Economics)
- NEP-ENV-2011-11-21 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2008. "Climate Change and Economic Growth: Evidence from the Last Half Century," NBER Working Papers 14132, National Bureau of Economic Research, Inc.
- Bhattacharyya, Sambit, 2009.
"Institutions, diseases, and economic progress: a unified framework,"
Journal of Institutional Economics,
Cambridge University Press, vol. 5(01), pages 65-87, April.
- Sambit Bhattacharyya, 2008. "Institutions, Diseases and Economic Progress: A Unified Framework," Departmental Working Papers 2008-15, The Australian National University, Arndt-Corden Department of Economics.
- Galor, Oded & Weil, David N, 1996.
"The Gender Gap, Fertility, and Growth,"
American Economic Review,
American Economic Association, vol. 86(3), pages 374-87, June.
- Margaret S. McMillan & William A. Masters, 2000.
"Climate and scale in economic growth,"
CSAE Working Paper Series
2000-13, Centre for the Study of African Economies, University of Oxford.
- William A. Masters & Margaret S. McMillan, 2000. "Climate and Scale In Economic Growth," CID Working Papers 48, Center for International Development at Harvard University.
- William A Masters and Margaret S McMillan, 2000. "Climate and Scale in Economic Growth," Economics Series Working Papers WPS/2000-13, University of Oxford, Department of Economics.
- Masters, William A. & McMillan, Margaret S., 2001. "Climate And Scale In Economic Growth," Miscellaneous Papers 11845, Agecon Search.
- Chakraborty, Shankha & Papageorgiou, Chris & Pérez Sebastián, Fidel, 2010.
"Diseases, infection dynamics, and development,"
Journal of Monetary Economics,
Elsevier, vol. 57(7), pages 859-872, October.
- P. Michael Link & Richard S.J. Tol, 2004. "Possible Economic Impacts of a Shutdown of the Thermohaline Circulation: an Application of FUND," Working Papers FNU-42, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2004.
- Eboli, Fabio & Parrado, Ramiro & Roson, Roberto, 2010.
"Climate-change feedback on economic growth: explorations with a dynamic general equilibrium model,"
Environment and Development Economics,
Cambridge University Press, vol. 15(05), pages 515-533, October.
- Fabio Eboli & Ramiro Parrado & Roberto Roson, 2009. "Climate Change Feedback on Economic Growth: Explorations with a Dynamic General Equilibrium Model," Working Papers 2009.43, Fondazione Eni Enrico Mattei.
- Strulik, Holger, 2008.
"Geography, health, and the pace of demo-economic development,"
Journal of Development Economics,
Elsevier, vol. 86(1), pages 61-75, April.
- Strulik, Holger, 2007. "Geography, Health, and the Pace of Demo-Economic Development," Diskussionspapiere der Wirtschaftswissenschaftlichen FakultÃ¤t der Leibniz UniversitÃ¤t Hannover dp-361, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
- Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
- Bloom, David E & Canning, David & Sevilla, Jaypee, 2003. " Geography and Poverty Traps," Journal of Economic Growth, Springer, vol. 8(4), pages 355-78, December.
- Jerzmanowski, Michal, 2006. "Empirics of hills, plateaus, mountains and plains: A Markov-switching approach to growth," Journal of Development Economics, Elsevier, vol. 81(2), pages 357-385, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sarah Burns).
If references are entirely missing, you can add them using this form.