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Here Comes the Rain Again: Productivity Shocks, Educational Investments and Child Work

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  • Nordman, Christophe Jalil

    (IRD, DIAL, Paris-Dauphine)

  • Sharma, Smriti

    (Newcastle University)

  • Sunder, Naveen

    (Bentley University)

Abstract

In predominantly agrarian economies with limited irrigation, rainfall plays a critical role in shaping households' incomes and subsequently their spending decisions. This study uses household-level panel data from a nationally representative survey in India to estimate the effect of agricultural productivity shocks – as proxied by exogenous annual rainfall deviations from long-term average – on education expenditures and children's work status in rural Indian households. Our results show that a transitory increase in rainfall significantly reduces education expenditures and increases the likelihood of child labor across a range of work activities. Additionally, we show that productivity-enhancing inputs such as land ownership and credit access do not mitigate these countercyclical effects of rainfall variations, indicating the importance of market imperfections (in labor and land markets). We also find that the effects of productivity shocks are reinforced for historically marginalized castes, and moderated for more educated households. These highlight that the average effects mask considerable heterogeneity based on household and regional characteristics.

Suggested Citation

  • Nordman, Christophe Jalil & Sharma, Smriti & Sunder, Naveen, 2020. "Here Comes the Rain Again: Productivity Shocks, Educational Investments and Child Work," IZA Discussion Papers 13405, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp13405
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    Cited by:

    1. Sen, Kritika & Villa, Kira M., 2022. "Rainfall shocks and adolescent school-work transition: Evidence from rural South Africa," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322383, Agricultural and Applied Economics Association.
    2. Sivadasan, Jagadeesh & Xu, Wenjian, 2021. "Missing women in India: Gender-specific effects of early-life rainfall shocks," World Development, Elsevier, vol. 148(C).
    3. Yasmine Bekkouche & Kenneth Houngbedji & Oswald Koussihouede, 2022. "Rainy days and learning outcomes: Evidence from Sub-Saharan Africa," Working Papers DT/2022/07, DIAL (Développement, Institutions et Mondialisation).

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    More about this item

    Keywords

    market imperfections; rainfall shocks; education expenditures; child work; India;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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