Farmer education and the weather: evidence from Taiwan (1976–1992)

Abstract

This paper uses farm household and weather data from 1976 to 1992 in Taiwan to measure the role of unusual weather conditions in explaining time and geographical variation of the return to education in farming. Based on a farm household model, we show that the effect of education measured from an income function is both technical and allocative. For a set of schooling variables, this effect is found to increase with adverse weather. It implies that education provides a higher relative advantage—and therefore has a higher economic value—when the environment is more unstable and more difficult to deal with. This gives empirical support to the notion that education improves the capacity to adapt to change and disequilibria, on top of its static technical effects.