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Rainfall Forecasts, Weather and Wages over the Agricultural Production Cycle

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  • Roswenzweig, Mark R.

    (Yale University)

  • Udry, Christopher

    (Yale University)

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.

Suggested Citation

  • Roswenzweig, Mark R. & Udry, Christopher, 2014. "Rainfall Forecasts, Weather and Wages over the Agricultural Production Cycle," Working Papers 128, Yale University, Department of Economics.
    • Handle: RePEc:ecl:yaleco:128
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    References listed on IDEAS

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    1. Mobarak, Ahmed Musfiq & Rosenzweig, Mark, 2013. "Risk, Insurance and Wages in General Equilibrium," Working Papers 127, Yale University, Department of Economics.
    2. Seema Jayachandran, 2006. "Selling Labor Low: Wage Responses to Productivity Shocks in Developing Countries," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 538-575, June.
    3. 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.
    4. Melanie Morten, 2016. "Temporary Migration and Endogenous Risk Sharing in Village India," NBER Working Papers 22159, National Bureau of Economic Research, Inc.
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    2. Yegbemey, Rosaine Nérice & Bensch, Gunther & Vance, Colin, 2021. "Weather information for smallholders: Evidence from a pilot field experiment in Benin," Ruhr Economic Papers 930, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Jisang Yu & Nathan P. Hendricks, 2020. "Input Use Decisions with Greater Information on Crop Conditions: Implications for Insurance Moral Hazard and the Environment," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(3), pages 826-845, May.
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    5. Leandro De Magalhães & Raül Santaeulàlia-Llopis, 2015. "The Consumption, Income, and Wealth of the Poorest: Cross-Sectional Facts of Rural and Urban Sub-Saharan Africa for Macroeconomists," Bristol Economics Discussion Papers 15/655, School of Economics, University of Bristol, UK.
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    7. Gadenne, Lucie & Norris, Sam & Singhal, Monica & Sukhtankar, Sandip, 2021. "In-Kind Transfers as Insurance," CEPR Discussion Papers 15844, C.E.P.R. Discussion Papers.
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    9. Kibrom A. Abay & Leah E. M. Bevis & Christopher B. Barrett, 2021. "Measurement Error Mechanisms Matter: Agricultural Intensification with Farmer Misperceptions and Misreporting," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 498-522, March.
    10. Zhangqi Zhong & Yiqin Hu & Lei Jiang, 2019. "Impact of Climate Change on Agricultural Total Factor Productivity Based on Spatial Panel Data Model: Evidence from China," Sustainability, MDPI, vol. 11(6), pages 1-17, March.
    11. Hertweck, Matthias & Brey, Bjoern, 2017. "The Persistent Effects of Monsoon Rainfall Shocks in India: A Nonlinear VAR Approach," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168256, Verein für Socialpolitik / German Economic Association.
    12. Esther Delesalle, 2019. "Good Or Bad Timing? The Effects Of Productivity Shocks On Education And On Schooling Performance," LIDAM Discussion Papers IRES 2019021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    13. Bohorquez-Penuela, Camilo, 2021. "Weather Shocks and Agricultural Credit in Developing Countries: Evidence from a Second-Floor Institution," 2021 Annual Meeting, August 1-3, Austin, Texas 313994, Agricultural and Applied Economics Association.
    14. Michelson, Hope & Fairbairn, Anna & Ellison, Brenna & Maertens, Annemie & Manyong, Victor, 2021. "Misperceived quality: Fertilizer in Tanzania," Journal of Development Economics, Elsevier, vol. 148(C).
    15. Merfeld, Joshua D., 2020. "Smallholders, Market Failures, and Agricultural Production: Evidence from India," IZA Discussion Papers 13682, Institute of Labor Economics (IZA).
    16. Dieter von Fintel, 2016. "Wage flexibility in a high unemployment regime: spatial heterogeneity and the size of local labour markets," Working Papers 09/2016, Stellenbosch University, Department of Economics.
    17. Kramer, B. & Ceballos, F., 2018. "Enhancing adaptive capacity through climate-smart insurance: Theory and evidence from India," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275926, International Association of Agricultural Economists.
    18. David Boussios & Paul V. Preckel & Yigezu A. Yigezu & Prakash N. Dixit & Samia Akroush & Hatem Cheikh M'hamed & Mohamed Annabi & Aden Aw‐Hassan & Yahya Shakatreh & Omar Abdel Hadi & Ayed Al‐Abdallat &, 2019. "Modeling producer responses with dynamic programming: a case for adaptive crop management," Agricultural Economics, International Association of Agricultural Economists, vol. 50(1), pages 101-111, January.
    19. Pal, Soumya, 2021. "Weather Shock, Agricultural Productivity and Infant Health: A Tale of Environmental Injustice," GLO Discussion Paper Series 965, Global Labor Organization (GLO).
    20. Schlenker, Wolfram & Taylor, Charles A., 2021. "Market expectations of a warming climate," Journal of Financial Economics, Elsevier, vol. 142(2), pages 627-640.
    21. Ahmad, Husnain F. & Gibson, Matthew & Nadeem, Fatiq & Nasim, Sanval & Rezaee, Arman, 2022. "Forecasts: Consumption, Production, and Behavioral Responses," IZA Discussion Papers 15831, Institute of Labor Economics (IZA).
    22. Brad Hartman & Harvey Cutler & Martin Shields & Dave Turner, 2021. "The economic effects of improved precipitation forecasts in the United States due to better commuting decisions," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2149-2171, December.
    23. Merfeld, Joshua, 2021. "Misallocation and Agricultural Production: Evidence from India," 2021 Conference, August 17-31, 2021, Virtual 315914, International Association of Agricultural Economists.
    24. Wolfram Schlenker & Charles A Taylor, 2019. "Market Expectations About Climate Change," NBER Working Papers 25554, National Bureau of Economic Research, Inc.
    25. Merfeld, Joshua D., 2022. "Labor Elasticities, Market Failures, and Misallocation: Evidence from Indian Agriculture," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321214, Agricultural Economics Society - AES.

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    More about this item

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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