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Rainfall Forecasts, Weather, and Wages over the Agricultural Production Cycle

  • Mark R. Rosenzweig
  • Christopher Udry

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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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 104 (2014)
Issue (Month): 5 (May)
Pages: 278-83

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Handle: RePEc:aea:aecrev:v:104:y:2014:i:5:p:278-83
Note: DOI: 10.1257/aer.104.5.278
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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. Mark Rosenzweig & Ahmed Musfiq Mobarak, 2013. "Risk, Insurance and Wages in General Equilibrium," Working Papers 1035, Economic Growth Center, Yale University.
  3. 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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