Good Or Bad Timing? The Effects Of Productivity Shocks On Education And On Schooling Performance

It is often argued that negative productivity shocks have adverse effects on education in developing countries. In this paper, I assert that positive productivity shocks can also come at the expense of education. I present a theoretical model to predict the mechanisms when shocks occur in early childhood and in school-age. To capture exogenous shocks in productivity, I exploit variation in intensity of climate and prices across location and over time. The empirical part provides evidence that in early childhood, positive productivity shocks have persistent positive consequences on schooling performance. In contrast, the relationship becomes counter-cyclical when children are of school age. Current positive shocks increase child labor, reduce schooling performance, and decreases the education attainment when shocks become recurrent.