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Rainfall Forecasts, Weather and Wages over the Agricultural Production Cycle

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Listed author(s):
  • Mark Rosenzweig

    ()

    (Economic Growth Center, Yale University)

  • Christopher Udry

    ()

    (Economic Growth Center, 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 harveststage 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 Economic Growth Center, Yale University in its series Working Papers with number 1036.

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Length: 14 pages
Date of creation: Jan 2014
Handle: RePEc:egc:wpaper:1036
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Keywords: wages; forecasting; migration;

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Find related papers by JEL classification:
  • 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
  • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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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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Cited by:

  1. 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.
  2. 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, Department of Economics, University of Bristol, UK.

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