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Rainfall Variability, Child Labor, and Human Capital Accumulation in Rural Ethiopia
Author(s) -
Colmer Jonathan
Publication year - 2021
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/ajae.12128
Subject(s) - human capital , economics , agrarian society , investment (military) , diversification (marketing strategy) , agriculture , demographic economics , agricultural productivity , labour economics , geography , business , economic growth , archaeology , marketing , politics , political science , law
How does income uncertainty affect human capital investments in agrarian economies? Using child‐level panel data, I exploit a medium‐run change in mean‐preserving rainfall variability to identify the effects of income uncertainty on the child labor decisions and human capital investments of smallholder farmers in rural Ethiopia. I estimate that increased rainfall variability is associated with less child labor and more schooling, consistent with a diversification mechanism. These findings highlight the empirical relevance of income uncertainty for decision making and household investment in rural economies. I find no evidence that rainfall variability is associated with past, present, or future rainfall, nor with income, wealth, and agricultural outcomes. As such, residual variation in realized income shocks—the main confounding interpretation—does not appear to explain the results.