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Short- and long-term effects of the 1998 Bangladesh flood on rural wages

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Author Info

  • Mueller, Valerie
  • Quisumbing, Agnes

Abstract

Natural disasters have particularly devastating impacts on economic growth in developing countries because they impede the accumulation of capital. The resilience of labor markets is crucial especially for the poor who rely only on labor to diversify their income portfolio and buffer against risk. Such a risk management strategy may become more challenging as global climate change increases the frequency of natural disasters. We use the Bangladesh Flood Impact panel household survey to evaluate how the 1998 “flood of the century” affected wages in Bangladesh. We find long-term declines in wages where nonagricultural labor markets are more severely affected. We also evaluate how soil quality and proximity to auxiliary labor markets cushion labor markets against the disaster. The most compelling evidence shows that workers in areas further from centers of economic activity are more vulnerable to flood-induced wage losses. Our findings suggest that future emergency relief and climate change programs should consider the protection of labor markets by improving infrastructure to facilitate job searches in alternative locations or reduce migration costs.

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 956.

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Date of creation: 2010
Date of revision:
Handle: RePEc:fpr:ifprid:956

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Related research

Keywords: accumulation of capital; Climate change; Disasters; economic growth; flood; labor markets; migration costs; Risk management; Soil quality; Wages;

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References

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  1. Harounan Kazianga & Christopher Udry, 2004. "Consumption Smoothing? Livestock, Insurance and Drought in Rural Burkina Faso," Working Papers, Economic Growth Center, Yale University 898, Economic Growth Center, Yale University.
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  8. Banerjee, Lopamudra, 2007. "Effect of Flood on Agricultural Wages in Bangladesh: An Empirical Analysis," World Development, Elsevier, Elsevier, vol. 35(11), pages 1989-2009, November.
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  15. Yamauchi, Futoshi & Yohannes, Yisehac & Quisumbing, Agnes R., 2009. "Natural disasters, self-Insurance, and human capital investment: Evidence from Bangladesh, Ethiopia, and Malawi," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 881, International Food Policy Research Institute (IFPRI).
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Cited by:
  1. Baez, Javier E. & Kronick, Dorothy & Mason, Andrew D., 2013. "Rural households in a changing climate," Policy Research Working Paper Series 6326, The World Bank.
  2. Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.

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