Weather Shocks and Labor Allocation: Evidence from Rural Brazil

Abstract

We examine the effects of rainfall shocks on household work decisions in Brazil. We show that rural farming households increase labor supply in non‐agricultural sectors during drought episodes. An additional drought month per year is associated with greater likelihood of holding more than one job, lower share of agricultural employment, and more time spent performing a secondary job. Together, these findings suggest that households alter their labor decisions to mitigate the consequences of weather shocks.