Rainfall Shocks Research Articles

Distributional Effects of Corruption When Enforcement is Biased: Theory and Evidence from Bribery in Schools in Bangladesh

In many models of corruption where enforcement is unbiased, the rich are more likely to pay bribes for their children's education, implying that corruption reduces educational inequality. We develop models of bribery that reflect the fact that in developing countries, anticorruption enforcement is not unbiased, and higher income of a household is associated with higher bargaining power and better quality of institutions. In models of biased enforcement, the rich are less likely to pay bribes, making bribery regressive. The OLS estimates of the effects of household income are likely to find spurious progressivity in the incidence of bribery in schools. We exploit temporary rainfall shocks to provide suggestive evidence on the ability‐to‐pay effect, while long‐term rainfall differences capture the combined ‘poor people’ and ‘poor area’ effects. We find that the poor are more likely to pay bribes, and the amount paid does not depend on household income. The evidence rejects the ability‐to‐pay and related models based on unbiased enforcement, and is consistent with the ‘refusal‐to‐pay model’ of bargaining power where the rich decline to pay bribes. ‘Free schooling’ is free only for the rich, and corruption makes the playing field skewed against the poor.

The impact of water access on short‐term migration in rural India

Migration is an important risk‐reduction strategy for households in developing countries. In this paper, we examine the impact of rainfall variability and irrigation availability on short‐term migration decisions in India. Our results show that both rainfall shocks and the availability of irrigation impact the decisions of households to dispatch migrants. For irrigation, we find that migration responds to costs and that deep fossil‐water wells, which provide a constant source of water, eliminate any benefit of short‐term migration. This suggests that regions with access to more secure and stable sources of water are less likely to rely on migration as an income‐smoothing mechanism, at least in the short run. Whether this holds in the long run will depend on the continued stability and availability of irrigation water.

The impact of early-life shocks on adult welfare in Brazil: Questions of measurement and timing

Recent literature provides evidence that income shocks early in life can have long-run consequences on adult welfare. Rural Brazil frequently suffers from rainfall variations that negatively impact vulnerable households, who often lack the means for coping with these events. This paper evaluates how early-life rainfall shocks influence adult health and socioeconomic outcomes in Brazil. We find evidence that several critical periods can produce long-run consequences. Using rainfall deviations, our two most robust results are that greater rainfall in utero negatively impacts adult incomes (finding that a one standard deviation increase in rainfall causes adult incomes to fall by 7–10 percent) and that greater rainfall in the second and third years of life improve adult health (increasing body mass index by 0.16). However, our results depend crucially on our choices regarding two features. First, our results differ across two common measures of critical periods, which are used to define shocks relative to the timing of one's birth. Second, the way rainfall variation is measured also matters, with use of an extreme weather indicator suggesting heterogeneous effects by gender, with extreme weather negatively impacting women's health (both before and after birth) but positively affecting several men's outcomes (both before and after birth). We find some evidence that mortality selection may drive some of these results. This paper provides further evidence that early-life shocks (from in utero through the third year of life) can cause long-run consequences, but also suggests that more attention should be paid to the specific measurement and timing of rainfall shocks.

Rainfall shocks and child health: the role of parental mental health

ABSTRACT This study examines the impacts of rainfall shocks on child health in Vietnam. It uses Young Lives data matched with province level climate data covering the period 1970–2014. Existing literature demonstrates that shocks can impact on child health by reducing household income or through the incidence of disease. This paper identifies and confirms a third mechanism: shocks impacting on parents’ mental health which, in turn, reduce children's physical health. We find that one unit increase in parental mental health caused by rainfall shocks will increase the probability of a child being underweight by 0.976. Using an instrumental variable strategy, we can interpret these results as causal. We instrument parental mental health with a variable that captures whether the adult has been a victim of a crime. We also find that households that receive support, from both formal and informal channels, are less vulnerable to rainfall shocks, in terms of reducing negative health outcomes.

Household Finance in Developing Countries: Evidence from India

This paper studies how adjustment costs in real estate investments affect portfolio choices of developing economy households. Using novel panel data on Indian households, we document that while most households hold outstanding investments in real estate, the majority of them participated exclusively in financial assets during the five year survey period. We explain these stylized facts by identifying how households allocate their marginal income across various assets. Using local rainfall shocks as a source exogenous variation in household incomes, we empirically establish the presence of adjustment costs in real estate, which drives the infrequent participation of households in this asset class. We further show that the households use financial assets as a transitory asset class on their way to accumulating real estate. Our results are consistent with a theoretical model of portfolio choice where households face an adjustment cost to re-adjust their lumpy real estate holdings.

A Drop of Love? Rainfall Shocks and Spousal Abuse: Evidence from Rural Peru

We investigate whether the exposure to rainfall shocks affects the experience of physical intimate partner violence by women in rural areas of the Peruvian Andes. Using data from the Demographic and Health Surveys over the period 2005-2014, we track changes in women's experience of physical intimate partner violence following the exposure to rainfall shocks during the cropping season in the municipality. Our results indicate that the prevalence of physical intimate partner violence increases by 65 percent after the occurrence of events of drought, but not flood, during the cropping season. We argue, based on further results, that this effect is mediated by increased poverty-related stress and reduced female empowerment caused by rainfall shocks.

(Un)Natural Disasters: Distributive Politics in Northeast Brazil

Emergency spending is often exempt from campaign period restrictions and procurement guidelines, making it attractive for opportunistic politicians, but natural disasters are seen as outside political business cycles. However, droughts are frequent but challenging to measure, so politicians can leverage discretion for electoral gain. This paper analyzes electoral cycles, term limits, and partisan targeting around municipal drought declaration in Northeast Brazil. Two sources of exogeneity (rainfall shocks, electoral calendar) isolate the effect of non-climatic factors on drought declarations. I find that drought declarations, which trigger relief, are more likely in mayoral election years. Incumbents are more likely to win re-election if they declare a drought in the election year, during below or above average rainfall. The results are consistent with interviews suggesting voters reward competent mayors and mayors trade relief for votes. This study highlights the interaction between distributive and environmental politics, which has increasing consequences due to climate change.

The Origins of Cognitive Skills and Non-Cognitive Skills: The Long-Term Effect of In-Utero Rainfall Shocks in India

Skills are an important predictor of labour, education, and wellbeing outcomes. Understanding the origins of skills formation is important for reducing future inequalities. This paper analyses the effect of shocks in-utero on human capital outcomes in childhood and adolescence in India. Combining historical rainfall data and longitudinal data from Young Lives, we estimate the effect of rainfall shocks in-utero on cognitive and non-cognitive skills development over the first 15 years of life. We find negative effects of rainfall shocks on receptive vocabulary at age 5, and on mathematics and non-cognitive skills at age 15. Also, shocks occurred after the first trimester are more detrimental for skills development. Our findings support the implementation of policies aiming at reducing inequalities at very early stages in life.

No Rain No Gain – How Reduced Rainfall Impacts on Children’s School Attendance in Uganda

The increasing frequency of negative rainfall shocks presents households with a challenge of whether to send their children to school or withdraw them, in order to provide shock-coping support in the household. We use high-resolution spatial rainfall data matched with geo-referenced Uganda National Panel Survey data to estimate the effect of negative rainfall shocks on children’s school attendance. We find that exposure to negative rainfall shocks reduces children’s school attendance by almost 10%. These results have important policy implications for improving children’s schooling in Uganda, particularly in geographical areas that receive highly erratic levels of rainfall.

The Real Effects of Mobile Money: Evidence from a Large-Scale Fintech Expansion

Mobile money services have rapidly expanded across emerging and developing economies and enabled new ways through which households and firms can conduct payments, save and send remittances. We explore how mobile money use can impact economic outcomes in India using granular data on transactions from Paytm, one of the largest mobile money service provider in India with over 400 million users. We exploit the period around the demonetization policy, which prompted a surge in mobile money adoption, and analyze how mobile money affects traditional risk-sharing arrangements. Our main finding is that mobile money use increases the resilience to shocks by dampening the impact of rainfall shocks on nightlights-based economic activity and household consumption. We complement these findings by conducting a firm survey around a phased targeting intervention which incentivized firms to adopt the mobile payment technology. Our results suggest that firms adopting mobile payments improved their sales after six-months of use, compared to other firms. We also elicit firms' subjective expectations on future sales and find mobile payment adoption to be associated with lower subjective uncertainty and greater sales optimism.

Regional Migration, Insurance and Economic Shocks: Evidence from Nicaragua

In developing countries most migrants are internal migrants, yet there is limited evidence to show whether internal migrants represent a source of insurance to the original household or vice versa. I test the insurance role of transfers sent and received by young migrants by estimating the causal impact of income shocks in the migrants’ locations of origin and destination on inter-household transfers. Rainfall shocks are found to lead to changes in income but not in consumption, indicating that households are able to smooth consumption. I find that young migrants provide insurance to their original households and that the level of insurance increases when migrants and households are exposed to low correlated rainfall shocks. This article shows evidence of bilateral insurance between rural migrants and their original households when the differences in the intensity of the shocks increase. These results provide new evidence of risk-sharing strategies among households geographically spread around a country.

Remember when it rained – Schooling responses to shocks in India

Abstract Despite long-standing international agreements like the Millennium Development Goals, 264 million children in developing countries are not enrolled in school, and children in rural areas remain twice as likely to be out of school as children in urban areas. One potential explanation for this pattern is that children’s education in rural areas is vulnerable to weather shocks, but there is no consensus about whether rainfall shocks help or harm school enrollment in the existing literature. This paper explores whether changes in the relationship between rainfall shocks and schooling outcomes over time can explain the different results in the literature by using household survey data from India across three decades. My study finds that adverse rainfall shocks have an increasingly stronger positive impact on school enrollment over time, whereas enrollment is increasingly falling after positive rainfall shocks. This effect is stronger for girls than for boys, more pronounced for older children, and is consistent with an increase in the importance of opportunity costs of a child’s time in more recent years. Children may have to drop out of school when employment opportunities are more readily available after a positive rainfall shock, but are able to go to school when jobs are scarce. These results offer a potential explanation for the different results in the literature, where studies on countries with higher economic development tend to find results consistent with an opportunity cost story, whereas this is not the case for studies on countries with a lower level of development. The results suggest that policymakers need to pay close attention to the obstacles faced by girls and older children to make access to education universal, and should develop policy tools that incentivize households to send their children to school even when employment opportunities are readily available.

Inflation co-movement in emerging and developing Asia: the monsoon effect

ABSTRACT Co-movement (synchronicity) in food-inflation rates among emerging and developing countries in Asia is partly due to common rainfall shocks – a result which the paper terms the ‘monsoon effect’. Economies with higher trade integration and co-movement in nominal effective exchange rates also experience greater food-inflation co-movement. In the context of the growing literature on the globalization of inflation, these results suggest that common weather patterns are partly responsible for any role played by a so-called ‘global factor’ among inflation rates in emerging and developing economies, in Asia at least.

Child Labor and Rainfall Deviation: Panel Data Evidence from Rural Vietnam

Rainfall shocks to the agricultural sector can pull children into agricultural work and/or household chores. This is problematic because both forms of child work are potentially precarious. This study examines the relationship between rainfall deviations and child labor for rural households in Vietnam using panel data covering the period 2006–14. We classify child labor into agricultural and nonagricultural activities as well as household chores. We study children's entrance into work and the time intensity of work. Using child‐level fixed effects, we find evidence that above‐average rainfall is associated with children entering agricultural work as well as being pulled into (and spending more time doing) household chores. Our findings suggest that intra‐household experiences of exogenous weather shocks are likely to vary at the individual level, suggesting a need for a more tailored approach to policymaking.

Cash Transfers, Negative Rainfall Shocks, and Child Food Insecurity in Ethiopia

This paper examines the role that social cash transfers play in mitigating the impact of negative rainfall shocks on the welfare of children in rural households. The study employed panel data that were collected between 2012 and 2014 for the evaluation of the social cash transfer pilot programme (SCTPP) in Tigray regional state of Ethiopia. A follow-up survey was conducted in 2016 to capture the effects of a negative rainfall shock triggered by El Nino weather events, which seriously affected the countries in eastern and southern Africa between the beginning of 2015 and early 2016. The results from the Correlated Random Effects (CRE) model reveal that negative rainfall shocks cause child food insecurity. Cash transfers have positive welfare effect on children after adjusting for the impact of rainfall shocks. In the presence of negative rainfall shocks, children in the beneficiary households are better-off in their food security status than those in the comparison households. The paper provides policy-relevant findings to stimulate dialogue regarding the effectiveness of social cash transfers in enhancing rural households’ capacity to manage the detrimental welfare impacts of negative rainfall shocks on their most vulnerable members.

Reinforcement or compensation? Parental responses to children\u2019s revealed human capital levels

A small but increasing body of literature finds that parents invest in their children unequally. However, the evidence is contradictory, and providing convincing causal evidence of the effect of child ability on parental investment in a low-income context is challenging. This paper examines how parents respond to the differing abilities of primary school-aged Ethiopian siblings, using rainfall shocks during the critical developmental period between pregnancy and the first 3 years of a child’s life to isolate exogenous variations in child ability within the household, observed at a later stage than birth. The results show that on average parents attempt to compensate disadvantaged children through increased cognitive investment. The effect is significant, but small in magnitude: parents provide about 3.9% of a standard deviation more in educational fees to the lower-ability child in the observed pair. We provide suggestive evidence that families with educated mothers, smaller household size and higher wealth compensate with greater cognitive resources for a lower-ability child.

Did rainfall shocks cause civil conflict in Sub-Saharan Africa? The implications of data revisions

In their seminal paper, Miguel et al. (2004) found that negative rainfall shocks (measured as negative year-on-year rainfall growth) had caused civil conflict in sub-Saharan Africa over the 1981–1999 period. Since then, the rainfall and conflict data they used had undergone multiple revisions. We show that rainfall shocks are no longer statistically significant for civil conflict when the revised data are used. This is true whether we employ a different functional form for rainfall, extend the sample to include more recent observations, use longer lags for rainfall shocks, employ dynamic panel regression, or panel regressions that take into account of cross-sectional dependence. Using rainfall shocks as instruments for growth, we also find that growth is insignificant for civil conflict if the revised data are used. Upon further investigation, we find that updates in the rainfall and conflict data for one or a few countries may alone cause rainfall shocks to lose statistical significance.

Inflation Co-Movement in Emerging and Developing Asia

Co-movement (synchronicity) in inflation rates among a set of 13 emerging and developing countries in Asia is shown to be strongest for the food component, partly due to common rainfall shocks—a result which the paper terms the ‘monsoon effect.’ Economies with higher trade integration and co-movement in nominal effective exchange rates also experience greater food-inflation co-movement. By contrast, cross-country co-movement in core inflation is weak and the aforementioned determinants have little explanatory power, suggesting a prominent role for idiosyncratic domestic factors in driving core inflation. In the context of the growing literature on the globalization of inflation, these results suggest that common weather patterns are partly responsible for any role played by a so-called ‘global factor’ among inflation rates in emerging and developing economies, in Asia at least.

Droughts, conflict, and the African slave trade

Historians have frequently suggested that droughts helped facilitate the African slave trade. By introducing a previously unused dataset on 19th century rainfall levels in Africa, I provide the first empirical examination of this hypothesis. I find a strong negative relationship between rainfall shocks and the number of slaves exported from a given region. I also find that extreme temperature shocks in either direction increase slave exports. Building on the detailed qualitative work of Dias (1981), Miller (1982), and others, I provide quantitative evidence for interethnic group conflict and more localized forms of violence being likely mechanisms through which these additional slaves were acquired. These results contribute to our understanding of the underlying economic conditions of the African slave trade.

Impact of climate change on food yield in Senegal: FAVAR approach

The main objective of this research is to evaluate the impact of climate change on food crop yields in Senegal using the Factor Augmented Vector Auto Regression (FAVAR) approach. The estimation method used is principal components analysis. We identified two major shocks representative of climate change. The first is an increase of temperature (thermal shock) and the second is a decrease in the quantity of precipitation (rainfall shock). The data covers the period 1970-2014 and each of the shocks is carried out over the prior year. The impact of each shock is observed along a time horizon of 10 years. The results show a positive impact of the thermal shock on the yields of rice, maize and millet, with a much greater impact on rice and maize yield. Rising temperatures are, however, detrimental to sorghum. A decline in rainfall has a negative impact on the yields of all cereals, which is in line with expectations.