Temperature shocks and rural labour markets: evidence from India

Abstract

The present study contributes to the literature on labour reallocation and adaptation in response to weather anomalies. Existing literature on labour mobility and weather shocks primarily focus on migration to the neglect of worker commuting as a potential adaptation strategy. Utilizing individual-level panel data from the Village Dynamics in South Asia (VDSA) dataset for the year 2010–2014, the present study explores the impact of weather anomalies on migration and commuting as well as participation and earnings in the non-agricultural sector. The fixed effects regression results show that negative temperature shocks induce a flow of labour outside the village through labour out-migration and longer-distance commutes. Temperature stress also negatively impacts non-agricultural earnings. The effects of temperature shocks are heterogeneous across the baseline climate of the villages suggesting evidence of adaptation to weather shocks. The study emphasizes the crucial role of labour mobility and adaptation in coping with weather shocks. The paper concludes with some policy suggestions. © 2022, The Author(s), under exclusive licence to Springer Nature B.V.