Drought of opportunities: Contemporaneous and long-term impacts of rainfall shocks on human capital

Higher wages are generally thought to increase human capital production, particularly in the developing world. We introduce a simple model of human capital production in which investments and time allocation differ by age. Using data on test scores and schooling from rural India, we show that higher...

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Bibliographic Details
Published in:Journal of political economy 2017-04, Vol.125 (2), p.527-561
Main Authors: Shah, Manisha, Steinberg, Bryce Millett
Format: Article
Language:English
Subjects:
Age differences
Bildungsinvestition
Children & youth
Dürre
Economic theory
Entwicklungsland
Human capital
Indien
Investition
Kinderarbeit
Niederschlag (Met)
Political economy
Rain
Rural areas
Schulbesuch
Studies
Wages & salaries
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Summary:Higher wages are generally thought to increase human capital production, particularly in the developing world. We introduce a simple model of human capital production in which investments and time allocation differ by age. Using data on test scores and schooling from rural India, we show that higher wages increase human capital investment in early life (in utero to age 2) but decrease human capital from age 5 to 16. Children switch out of school into productive work when rainfall is higher. The opportunity cost of schooling, even for fairly young children, is an important factor in determining overall human capital investment.
ISSN:0047-2697
1537-534X
0022-3808
1537-534X
DOI:10.1086/690828