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Reflections—Temperature Stress and the Direct Impact of Climate Change: A Review of an Emerging Literature

This article reviews the recent literature on the economics of exposure to temperature extremes. There is growing evidence from both micro and macro studies that in the short run, exposure to extreme temperature affects health, labor supply, and labor productivity, although empirical research on potential adaptive responses in the long run remains thin. We argue that, in addition to providing well-identified causal estimates of heat-related damages, environmental economics has an important role to play in estimating the full welfare costs of temperature stress, taking into account behavioral responses and institutional settings.