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Income Shocks, Adaptation, and Temperature-Related Mortality: Evidence from the Mexican Labor Market

Author

Listed:
  • Luis Sarmiento
  • Martino Gilli
  • Filippo Pavanello
  • Soheil Shayegh

Abstract

This paper examines the role of positive income shocks in helping workers adapt to extreme temperatures. We use daily temperature variations alongside the exogenous implementation of a wage and fiscal policy in Mexican municipalities along the US border to show that increased disposable income significantly reduces temperature-related mortality in treated areas. Exploring the mechanisms, we find that income gains increase households’ adaptive capacity, particularly through higher electricity expenditures and the purchase of electric heaters. Our findings provide causal estimates of how income influences the marginal effect of temperature on mortality and contribute to the debate on the effectiveness of climate-related redistribution policies.

Suggested Citation

  • Luis Sarmiento & Martino Gilli & Filippo Pavanello & Soheil Shayegh, 2024. "Income Shocks, Adaptation, and Temperature-Related Mortality: Evidence from the Mexican Labor Market," CESifo Working Paper Series 11542, CESifo.
    • Handle: RePEc:ces:ceswps:_11542
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    References listed on IDEAS

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    1. Evans, William N. & Moore, Timothy J., 2011. "The short-term mortality consequences of income receipt," Journal of Public Economics, Elsevier, vol. 95(11), pages 1410-1424.
    2. Alejandro del Valle, 2024. "Saving Lives with Indexed Disaster Funds: Evidence from Mexico," American Economic Journal: Economic Policy, American Economic Association, vol. 16(2), pages 442-479, May.
    3. Alexis Diamond & Jasjeet S. Sekhon, 2013. "Genetic Matching for Estimating Causal Effects: A General Multivariate Matching Method for Achieving Balance in Observational Studies," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 932-945, July.
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    Keywords

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    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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