Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223847
Authors: 
Nordman, Christophe Jalil
Sharma, Smriti
Sunder, Naveen
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 13405
Abstract: 
In predominantly agrarian economies with limited irrigation, rainfall plays a critical role in shaping households' incomes and subsequently their spending decisions. This study uses household-level panel data from a nationally representative survey in India to estimate the effect of agricultural productivity shocks – as proxied by exogenous annual rainfall deviations from long-term average – on education expenditures and children's work status in rural Indian households. Our results show that a transitory increase in rainfall significantly reduces education expenditures and increases the likelihood of child labor across a range of work activities. Additionally, we show that productivity-enhancing inputs such as land ownership and credit access do not mitigate these countercyclical effects of rainfall variations, indicating the importance of market imperfections (in labor and land markets). We also find that the effects of productivity shocks are reinforced for historically marginalized castes, and moderated for more educated households. These highlight that the average effects mask considerable heterogeneity based on household and regional characteristics.
Subjects: 
rainfall shocks
education expenditures
child work
market imperfections
India
JEL: 
D13
I21
J16
O12
Document Type: 
Working Paper

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