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Rainfall Forecasts, Weather and Wages over the Agricultural Production Cycle

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  • Mark R. Rosenzweig
  • Christopher Udry

Abstract

We look at the effects of rainfall forecasts and realized rainfall on equilibrium agricultural wages over the course of the agricultural production cycle. We show theoretically that a forecast of good weather can lower wages in the planting stage, by lowering ex ante out-migration, and can exacerbate the negative impact of adverse weather on harvest-stage wages. Using Indian household panel data describing early-season migration and district-level planting- and harvest-stage wages over the period 2005-2010, we find results consistent with the model, indicating that rainfall forecasts improve labor allocations on average but exacerbate wage volatility because they are imperfect.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19808.

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Date of creation: Jan 2014
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Publication status: published as Mark R. Rosenzweig & Christopher Udry, 2014. "Rainfall Forecasts, Weather, and Wages over the Agricultural Production Cycle," American Economic Review, American Economic Association, vol. 104(5), pages 278-83, May.
Handle: RePEc:nbr:nberwo:19808

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  1. Anjini Kochar, 1999. "Smoothing Consumption by Smoothing Income: Hours-of-Work Responses to Idiosyncratic Agricultural Shocks in Rural India," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 50-61, February.
  2. Seema Jayachandran, 2005. "Selling Labor Low: Wage Responses to Productivity Shocks in Developing Countries," UCLA Economics Online Papers 370, UCLA Department of Economics.
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