Will We Adapt? Temperature Shocks, Labor Productivity, and Adaptation to Climate Change in the United States (1986–2012)

How effectively will economic agents adapt to climate change? This study assesses the scope for long-run climate adaptation by comparing the economic impacts of daily heat shocks across varying climatic regions within the United States. Using a panel of county-level payroll and weather data (1986–2012), I estimate the causal impact of hot days on local labor product. For the average U.S. county, an additional day above 90°F results in a -0.048% decline in payroll per capita that year, consistent with previous studies (e.g. Hsiang and Deryugina, 2014). Places more prone to extreme heat stress (e.g. Houston) exhibit significantly lower temperature sensitivities than colder ones (e.g. Boston); a year with 10 additional 90°F days reduces output per capita by - 2.63% in counties in the coldest quintile; -0.46%, or roughly one fifth that, in the warmest quintile, suggesting significant scope for long-run adaptation to climate change given appropriate investments. However, the fact that even the hottest, well adapted regions of the United States suffer economically meaningful production impacts from extreme heat suggests that climate adaptation may entail non-trivial costs.