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Drought of Opportunities: Contemporaneous and Long Term Impacts of Rainfall Shocks on Human Capital

Development Challenge

Low-income families throughout the developing world often experience extreme economic insecurity, making them highly vulnerable to shocks. In this context, any unexpected event – be it a drought, illness, or temporary unemployment – can have long-term or even permanent effects on health and socioeconomic status. Specifically, environmental or economic shocks can limit a mother’s access to proper nutrition during pregnancy, with significant negative implications for human development. Inadequate maternal health can impact the metabolism of a fetus, which can limit cognitive development and lead to future health issues like diabetes, obesity and cardio-vascular diseases.[1]

Context

In India, well over half of the labor force occupies the agricultural sector, which is heavily dependent on the monsoon rains between June and October. Over 70% of agricultural production is rain fed, making droughts particularly destructive for households who depend on farming for their livelihoods.[2]  During these shocks, families often face lower wages and reduced household income, often limiting their access to nutritional foods and health care. These impacts are especially detrimental to vulnerable populations, including pregnant women and infants. While many studies have evaluated the effect of in-utero shocks on infant and child health, this study is one of the first to consider educational outcomes for children exposed to environmental shocks while in-utero.

The authors suggest that the health issues experienced by children exposed to drought during in-utero development (including illness and social constraints) may keep these children from attending school. Additionally, children exposed to shocks during the in-utero period may have stunted cognitive development, contributing to comparably lower reading and math scores, regardless of the amount of schooling they receive.

Despite these negative impacts of drought during the in-utero period, the authors suggest that it is possible for drought to lead to an increase in investment in human capital once children are school aged. In agricultural regions, when rain is scarce, so too is work. This decline in workload during drought years means that families have less incentive to send school-age children to work and thus are more likely to send them to school. Conversely, the authors suggest that when rains are heavy, children will be called on to work rather than attend school. Children are more likely to drop out of school in positive rainfall shock years to pursue labor opportunities, thus lowering test scores.

Evaluation Strategy

This study utilizes data from the Annual Status of Education Report (ASER) implemented by the NGO Pratham, which tested over 2 million children in 20 cohorts across rural India between 2005 and 2009.[3] The ASER data included test scores for numeracy and native language literacy for each child surveyed within the households, including children who were not currently, or had never been enrolled, in school. Scores were calculated by summing the number of correct answers to four questions each in math and reading (in their native language). The data also allowed for analysis of more standard educational measures such as school enrollment, drop-out behavior, attendance, and being on track in school (age for grade).

For the early life impacts, the authors investigate the effects of positive and negative rainfall shocks from in utero to age 4. The authors define a positive shock as yearly rainfall above the 80th percentile and negative shock (drought) as rainfall below 20th percentile within the district. The “positive" and “negative" shocks should not be taken in an absolute sense as they are not comparing districts that are prone to higher rainfall to those that are prone to lower rainfall. These are simply high or low rainfall years for each district within the given time frame (1975-2008).

The study also examined the impact of drought and positive rainfall shocks on work and wages by using the NSS (National Sample Survey) Round 60, 61, 62, and 64, which was collected at the household level all over India between 2004 and 2008 by the Government of India’s Ministry of Statistics. The researchers merged this data with district level rainfall data to explore the relationship between extreme weather, labor force participation and wages.

Results and Policy Implications

The study finds that children report higher school attendance and higher math test scores during drought years. Children score worse on both math and reading tests and are more likely to report having dropped out of school during high rainfall years. The authors point to economic theory to explain this trend by arguing that the lack of outside options during drought years leads to increased school attendance. Children on the margin of missing school or dropping out might stay in school if wages are low and outside opportunities are scarce. In support of this theory, the labor data shows that both the probability of working and hours worked decreased during droughts. Results for mothers are similar, and since women tend to be primary caregivers, it is likely they spend less time helping their children build skills during good rainfall years.

In contrast, the study also finds that high rainfall during the early stages of a child’s life (before the age of five) is associated with higher test scores in both math and reading, and these children are more likely to stay enrolled in school later in life. However, the magnitude of the effects on test scores is smaller than that of droughts later in life. The authors point out that in high rainfall years, rural families tend to have higher incomes and can thus invest more money into nutrition and medical care for their infant children, which is likely to have a positive impact on cognitive development.

Finally, the study shows that the impacts of both droughts and high rainfall on test scores and school attendances are lasting. For sixteen year olds, both the positive early life effects and negative school age effects were still present. The labor data shows similar results for total years of schooling and wages among adults aged 16-30.

The connection between environmental shocks and childhood development supports the need for drought relief and maternal health and nutrition programs in developing countries. The results also indicate that both time and income are important inputs into human capital, and that wage subsidy programs (such as NREGA in India) could potentially have counterintuitive effects as they reduce the time parents spend with their children and potentially encourage older kids to join the labor market, which could decrease human capital accumulation.

Timeline

2005-2009

[1] Almond, Douglas, “Is the 1918 Influenza Pandemic Over? Long-Term Effects of In Utero Influenza Exposure in the Post-1940 U.S. Population,” Journal of Political Economy, 2006, 114 (4), 672712. ; Almond, Douglas and Janet Currie, “Killing Me Softly: The Fetal Origins Hypothesis,” Journal of Economic Perspectives, Summer 2011, 25 (3), 153–172.; Black, Sandra E., Paul J. Devereux, and Kjell G. Salvanes, “From the Cradle to the Labor Market? The Effect of Birth Weight on Adult Outcomes,” Quarterly Journal of Economics, 2007, 122 (1), 40939. ; Dˆeschenes, Olivier, Michael Greenstone, and Jonathan Guryan, “Climate Change and Birth Weight,” American Economic Review Papers & Proceedings, May 2009, 99 (2), 211–217. ; Royer, Heather, “Separated at Girth: US Twin Estimates of the Effects of Birth Weight,” American Economic Journal: Applied Economics, 2009, 1 (1), 49–85.

[2] Mahajan, Vijay and Rajeev Kumar Gupta, “Non Farm Opportunities for Smallholder Agriculture,” January 2011. Paper presented at the IFAD Conference on New Directions for Smallholder Agriculture.

[3] For more information on ASER, see http://www.asercentre.org/ngo-education-india.php?p= ASER+survey