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Have you ever seen the rain? Effect of rainfall shocks on male agricultural wages in India

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  • Saha, Roshan
  • Won, Sunjae
  • Taylor, Mykel R.

Abstract

Rainfall significantly influences agricultural productivity and labor markets in India. Deviations from ‘normal’ rainfall patterns impact economic outcomes by altering labor supply and wage dynamics. This paper uses two definitions to examine the effects of rainfall shocks on male agricultural wages. First, we classify positive (negative) shocks as deviations above (below) the 80th (20th) percentiles of the historical district-month rainfall distribution (1990–2017). Second, we redefine shocks using the previous 3-year moving reference period to minimize forward-looking bias. Using panel fixed-effects models on district-level data from 586 districts across 20 states, we find that rainfall shocks affect wages asymmetrically. Negative rainfall shocks in harvest season increase male real wages, while positive shocks have mixed effects depending on intensity and timing. But these individual season shocks are not significant when we consider the 3-year recall period. Rather, a negative shock in the sowing season followed by either positive or negative shock in the harvest season, together, influences male wages at the district level. The study underscores the importance of considering the reference period used to define rainfall shocks.

Suggested Citation

  • Saha, Roshan & Won, Sunjae & Taylor, Mykel R., 2025. "Have you ever seen the rain? Effect of rainfall shocks on male agricultural wages in India," 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO 360941, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea25:360941
    DOI: 10.22004/ag.econ.360941
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    References listed on IDEAS

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    1. Islam, Asadul & Maitra, Pushkar, 2012. "Health shocks and consumption smoothing in rural households: Does microcredit have a role to play?," Journal of Development Economics, Elsevier, vol. 97(2), pages 232-243.
    2. Robert M. Townsend, 1995. "Consumption Insurance: An Evaluation of Risk-Bearing Systems in Low-Income Economies," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 83-102, Summer.
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