Rainfall Forecasts, Weather and Wages Over the Agricultural Production Cycle
15 Pages Posted: 17 Jan 2014 Last revised: 15 Feb 2023
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Rainfall Forecasts, Weather and Wages Over the Agricultural Production Cycle
Date Written: January 2014
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.
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