Household labor reallocation provides a potentially important channel for rural households to adapt to changing weather patterns. Exploiting the temporal and spatial variation of drought occurrence in India, I find that drought reduces the share of agriculture labor hours by 3% or by 110 hours (3% at the mean). This reduction is driven by households that do not own land. Motivated by these facts, I develop a model of labor allocation across the agriculture and non-agriculture sectors to analyze how droughts may affect structural transformation. My results imply that projected increases in the frequency of droughts over the next 30 years will induce landowning households to allocate 2% more labor to agriculture and induce landless households to reduce their agricultural labor. The net effect is a 1% to 2% reduction in agricultural labor. While small in percentage terms, this implies that 2.5 to 5 million individuals would leave agriculture. I use the model to analyze how projected climate change would affect the cost to the government of achieving its stated target of increasing the manufacturing share of GDP to 25% by 2035. In the absence of climate change, the government would have to subsidize non-agriculture wages by 28% with respect to 2011 non-agriculture wages. Under the current climate change projections, the subsidy would need to be 73% larger.
"Drought Shocks and Household Occupation Choices" (Draft Coming Soon)
Droughts are becoming increasingly common in India, where 50% of the labor force works in agriculture, and most agricultural production is rainfall dependent. This paper investigates the extent to which rural households adapt to drought by reallocating labor from agriculture to other sectors of the economy. I combine high-resolution data on drought with panel data on about 8,000 Indian households collected over a 20-year period in rural areas in 184 districts. I use household-level fixed effects regressions to estimate how drought affects household consumption and diversification from agriculture and to investigate the mechanisms underlying these effects. I find that household consumption declines by 7.3% in response to drought and agricultural jobs decline by 2.9% in the year following a drought. Further, I find that these effects are mediated by job skills and land ownership. Specifically, I find that households with working members who have completed primary education account for most of the workers who exit the agricultural sector. In contrast, I find that households that own land increase their agricultural labor share after experiencing a drought. Thus, while I find that drought causes households to diversify away from agriculture on aggregate, the extent of this structural change is mitigated by the behavior of landowners. Cultural norms, relative prices, and land market transaction costs provide potential explanations for this behavior.
Work in Progress
A model of Tiebout sorting on race and environmental quality is tested using a detailed dataset of 15 years on residential location, demographics, and chronic conditions for 7,35,647 seniors. This article finds evidence that high-income white seniors are 1.3 percentage points more likely to move out of neighborhoods with existing Superfund sites compared to neighborhoods without Superfund sites. Low-income seniors are 4.9 percentage points more likely to move into neighborhoods with existing Superfund sites compared to high-income seniors. However, these changes are not observed immediately after the listing of the sites. In addition, compared to neighborhoods without Superfund sites, the clean-up of a Superfund site leads to 1.7 percentage points lower chance to move out for non-whites after the year of clean-up. In comparison to high-income individuals, low-income individuals are 4 percentage points less likely to move into neighborhoods with cleaned-up sites. The racial impact of the cleanup suggests that initially white individuals are 1.8 percentage points less likely to move into a cleaned-up neighborhood compared to non-whites, nonetheless, they show 2.9 percentage points higher chance to move in after two years of the cleanup. Neighborhood gentrification exhibits inertia in the manifestation after the cleanup of Superfund sites. Furthermore, high-income movers moving out of existing or cleaned up Superfund site neighborhoods on an average move to neighborhoods with higher median household income, higher median house value, and higher owner-occupied properties. However, poor non-white seniors moving out of cleaned up Superfund site neighborhoods move to neighborhoods characterized by lower median household income, median house value, and higher renter-occupied properties. These findings reinforce the Environmental Justice literature by providing evidence on residential sorting based on one's race and income and preference for environmental quality.
"Airport Expansion, Air Pollution, and Death Count in Mexico City."
with Luis A. Fernández Intriago