Unanticipated events, perceptions, and household labor allocation in Zimbabwe

Abstract

• This paper evaluates labor allocation as a strategy to cope with unanticipated events during hyperinflation in Zimbabwe. • In this period households are already stressed by hyperinflation and so further labor reallocations delineate the bounds of possible labor responses. • In this stressed environment, new shocks compound existing stresses. • We find that different types of shocks disparately affect labor allocation; perceptions about experienced shocks also shift labor behavior. • Perceived rainfall shocks affect the share of labor allocated to migration activities and to non-labor participation. This paper investigates labor allocation as a strategy for coping with unanticipated events. We evaluate household responses to unforeseen death and rainfall shocks in Zimbabwe, during a period in which many households were already stressed due to the country’s long-term economic crisis. In this context, shocks compound existing stresses. Different types of shocks disparately affect household labor allocation. Household perceptions about the shocks experienced also shift labor use. Perceived rainfall shocks positively affect the share of labor allocated to migration-related activities and negatively affect the share of labor allocated to non-participation.